• Climate Change Scenarios
• Showdown Scenario
• The Nuclear Gameboard

Climate Change Scenarios

Paper presented by Clem Sunter at Wits Business School, Johannesburg on 16 January 2008

1. Context
   
   The biggest change in the planetary game is the increase in numbers of people inhabiting our tiny ball in space. In 1850, the global population hit one billion for the first time. It is now 6.5 billion, with the national population of two countries - China and India - exceeding the one billion mark. Accompanying the more than six-fold increase in global population has been the spread of the Industrial Revolution with its emphasis on fossil fuel consumption. The results for the atmosphere have been spectacular.
   
   The average emission of carbon dioxide per citizen in the world is now 4 tons per annum which means total global emissions of 26 billion tons. In 1850 the level of atmospheric carbon dioxide was 280 parts per million. It is now 383 ppm. Unchecked, it could reach somewhere between 550 and 600 ppm by 2050 i.e. double the figure of 1850 in just 200 years. Why is this so important?
   
   The 'greenhouse effect' was first predicted in 1827 by French mathematician Joseph Fourier and subsequently explained in much greater detail by Svante Arrhenius, a Swedish scientist, in 1890. It is the theory that, just like the glass in a greenhouse, certain gases in the Earth's atmosphere - including carbon dioxide - trap reflected solar radiation and thereby cause a rise in temperature in the enclosed environment. The increase in mean global temperature is currently estimated at 0.74 degrees centigrade during the last 100 years. Further warming of the atmosphere could not only lead to a hotter world but also to major changes in global and regional climates (hence the term 'climate change'). Other consequences could be crop losses necessitating changes in agricultural patterns (90% of food comes from fewer than 20 species of plants); increased frequency and amplitude of extreme weather events; rising sea levels (endangering low-lying areas like Bangladesh, the Netherlands, London, Venice, half of Florida and many islands); spread of diseases (like malaria) as well as pests; and desertification.
   
    
2. Scope
   
   The playing field in the context of climate change is divided into two halves:
   
   
   1. The curbing of carbon emissions. In this regard one must take into account the entire carbon chain through the lifecycle of the product (including its disposal). For example, it might appear obvious that electric cars are less carbon-emitting than petrol-driven cars; but one must allow for the carbon emitted during the production of the batteries which go inside the electric car as well as the carbon emitted in providing the electricity to charge them. Someone with humour compared walking/cycling to work in London with taking the underground tube train. He argued that with the extra physical exercise involved in the first option one would be hungrier and therefore more likely to consume a hamburger. The latter's carbon content which included the cattle's methane emission during its lifetime, the transport of the meat and the energy consumed in refrigerating and cooking it could end up higher than the tube journey per passenger!
   2. Preserving the photosynthetic uptake of the Earth's forests. The more forests are cut down, the less capacity the Earth has to absorb carbon dioxide. One idea recently mooted is that developing countries with large tropical rainforests should be paid an annual rental for not cutting them down (which is the exact opposite of what is happening at the moment).
   
    
3. Players
   
   There are 4 principal players in the climate change game:
   
   
   1. The Western Countries. America has the highest annual emissions per citizen in the world at 20 tons, which means that its total emissions are 6 billion tons (given its population of 300 million). Europe has an average annual emission of 13 tons per citizen.
   2. The Emerging Emitters which presently comprise China and India. China's annual emissions per citizen are nearly 6 tons, meaning that they have just overtaken America to become the largest emitter in the world. Their rapidly growing economy is ensuring that a growing proportion of their 1.3 billion population are gaining access to an American middle-class lifestyle. One Chinese government official said at a recent climate change conference that if China had not enacted its one-child policy in the late 1970s, China would now have a population of 1.6 billion. They have therefore saved 1.8 billion tons of carbon emissions per annum by having 300 million less people! India meanwhile with its population of 1.1 billion has an average annual emission of one ton per citizen; but that figure is set to rise significantly because of its own industrial revolution. Moreover, with its population expanding by 20 million per annum (i.e. Australia every year), total emissions are projected to increase at an astronomical rate.
   3. The rest including South Africa which, at 8 tons per citizen, makes it the largest emitter on the African continent. Obviously, this group has a vast range of national emission rates seeing that it includes Russia, the Middle East, South America, Indonesia as well as Africa and smaller Asian countries.
   4. The United Nations which is the only international body with the power and authority to impose universal rules to limit emissions and preserve forests.
   
    
4. Rules of the Game
   
   Whatever the outcome of the climate change game, these rules apply:
   
   
   1. The science is virtually certain. In other words, the world is warming up and it is due to man-made emissions. 'Virtually certain' according to the experts means in excess of 95 per cent probability, just short of the figure to convict a person of a criminal act in a court of law. However, there is still a minority out there who dispute the science. One would hesitate to put them in the same category as HIV/AIDS dissidents or Holocaust denialists. Instead, one should invoke the 'cautionary principle' which is set out in the next rule.
   2. We have one Earth with one atmosphere. If life becomes unlivable because we descend into a microwave, there is no other planet for mankind to find refuge in - other than a few lucky astronauts. So the stakes can be no higher; and one must be extremely cautious about dismissing the science (like one famous author who insists that climate experts are only in the game to feather their own nests by inspiring fear). Even if you feel the chance is only one in six that the greenhouse lobby are right, it is foolish to play Russian roulette on such a cosmic scale. You may make your name in the public domain, but future generations won't thank you for it in the event that you are wrong. Being responsible for your own oblivion is one thing, assisting everybody else's is another!
   3. Fossil fuels will continue to be a significant source of energy in all scenarios, there being well over 100 years of oil reserves and over 300 years of coal reserves remaining in the ground. Fuel security may also be a consideration for countries like China which have abundant coal resources but not much else. Even in the most optimistic scenario for the next 50 years, alternative energy sources such as solar, tidal, wind-driven and geothermal devices will probably satisfy no more than 20% of total global demand. Hydroelectric schemes are restricted to localities with major rivers and uranium has problems of its own (not least the disposal of spent material and threat of nuclear proliferation). Nuclear fusion is still a twinkle in the eye; but if it ever comes to pass on a commercial scale, everything will change. Of course, ethanol (or close equivalents) extracted from maize and other crops is being touted as the new frontier. Biofuels may help security of supply but they do not assist in bringing down carbon emissions. They may actually trigger a permanent increase in food prices as agricultural production is re-directed to the energy market.
   4. Despite the previous rule, the technology exists to make huge inroads into reducing carbon emissions. On the supply side, power plants are getting more efficient and carbon sequestration by liquefying the emissions and pumping them into underground sites is technically feasible though terribly expensive. Several pilot projects to prove the viability of constructing a zero-emission power plant where coal, oil or gas is the raw material feed are in the works. Nevertheless, a cardinal principle for this rule to make a difference world-wide is that technological breakthroughs are shared between the developed and developing world on a generous basis.
      
      On the demand side, the potential for energy savings which reduce an individual consumer's carbon footprint is even more promising. For example, with no advances in technology at all, people could be induced to switch to smaller, lighter, more fuel-efficient cars. The way to make this happen is through a tax surcharge which makes the carbon chain a significant factor in the purchase price of the car. If you want the adrenalin rush of going from nought to 100 in 5 seconds or the comfort of a luxury SUV, you have to pay upfront for its impact on the atmosphere. Such a principle can be applied to all consumer goods, but it presumes a huge change in government mindset everywhere as well as an effective way of calculating a product's lifetime carbon chain.
   5. The previous point about changing government mindset is a precursor to probably the most important rule of the game - the Three Musketeers rule - 'all for one and one for all'. Given that no government is going to diminish its nation's competitiveness unilaterally, rules governing climate change should be universally applied. The Kyoto Agreement breaks this rule as many important nations are conspicuously absent from it. America, as the leading per capita carbon emitter, has to take the lead but the UN has to be the principal intermediary through which the rules are agreed. It will need greater international co-operation than ever before, fostered through an incremental trust-building process among the participants.
   6. Finally, there is the supertanker effect. Whatever is done now will only impact the environment very slowly, just like trying to change the course of a supertanker mid-ocean. This is frustrating for the average person who likes to see consequences flow immediately from any action taken. The importance of this rule can be gauged from the belief of some prominent environmentalists that should the carbon dioxide content in the atmosphere surpass 450 ppm and temperatures rise by more than 2 degrees centigrade, certain irreversible changes will take place in the environment on account of feedback mechanisms kicking in e.g. the permafrost in Siberia will melt and release further significant quantities of carbon dioxide into the atmosphere. Their argument is simple: only by acting right now at 383 ppm can this disastrous scenario be averted.
   
    
5. Key Uncertainties
   
   The following uncertainties could exercise a critical influence over the outcome of the game:
   
   
   1. The political will to tackle the issue is shaky. As a species, we are not good at handling gradual threats. Shock events like international terrorism or an earthquake evoke a fight-or-flight response but the gradual stuff tends to be put on the back burner. For instance, even after Al Gore's call to arms in 'An Inconvenient Truth', the environment does not register sufficiently in the public consciousness for any of the candidates to make a big play out of it in the run-up to the forthcoming US Presidential Election. The possibility of an economic recession and withdrawal of troops from Iraq rank far higher as issues. As one environmentalist put it: "The only thing which will give climate change the boost it deserves is seven Katrinas in a row. That would do it." In that sense, the future pattern of extreme climatic events is a key uncertainly which could play an important role in determining how the game unfolds.
   2. The degree of international co-operation necessary to obtain agreement on policies and action is questionable at the moment. Ask yourself, is there a sufficient level of goodwill between the US, Europe, China, India, the Middle East and Russia to handle the problem collectively? A point consistently made by Indian and Chinese Authorities is that the West, particularly America, is the cause of the problem in the first place and has shown no sign of being prepared to make genuine sacrifices to rectify the situation. Unless the West with its much higher carbon footprint per citizen is willing to take the pain to make the gains, why should the emerging emitters? Certainly in the event of the geopolitical climate worsening because of acts of terrorism, a recession, renewed protectionism or regional wars, an international consensus on climate change will become virtually impossible.
   3. Related to the previous uncertainty, the choice of the next US President and the determination he or she shows in handling the issue will heavily influence the progress to be made in the short run. Bearing in mind the decision made at the recent UN climate change conference in Bali to defer any substantial agreement on policies and goals to the next meeting in 2009, we will know soon enough whether a sea-change in American attitude at the highest level has taken place.
   4. The specific consequences of global warming remain a key uncertainty because the climate change models are immensely complex and sensitive to changes in input. The rate of warming (we could even have a hiatus of cooler years), the rate of sea level rise and the regional/local impacts of climate change cannot be predicted with great accuracy. There will be winners and losers (Russia and Canada may be better off with milder weather, the US grain belt worse off with more droughts), but it is dangerous to play specific scenarios like the Gulf Stream disappearing and Britain having another Ice Age by such-and-such a date. Unfortunately, for policy-makers this haziness over consequences makes it even more difficult to get people to accept some sacrifices in their lives. Nevertheless, it is preferable to the (falsely) precise omens offered by some of the gloom-and-doom merchants, which are rightly dismissed by most ordinary folk.
   5. The cost of mitigation (i.e. doing something now to pre-empt the severity of climate change) versus the cost of adaptation (i.e. taking action later as and when the changes occur) is still a relative unknown. Recent studies suggest that mitigation is much cheaper than adaptation, but it all depends on the discount rate applied to future costs. Of course, this cost comparison becomes trivial if the result is an uninhabitable planet to which nobody can adapt in the long run. Mitigation then is the only strategy - whatever the costs. Understandably, justifying mitigation (which is about stopping something happening) is always more difficult than justifying an initiative to make something happen. How do you prove you were successful? Politicians will have to find a way around this conundrum (like they do with the threat of terrorism).
   6. Technological advances could change the whole picture. For example, if carbon sequestration is turned into a relatively cheap and effective process, such a development would make a huge difference to the electricity generation industry. If nuclear fusion becomes a reality, it turns the game upside down. A super-light, super fuel-efficient car would make an enormous difference.
   7. The future trajectory of energy prices could modify behaviour regarding energy consumption. While stratospheric oil price scenarios exist because some experts believe we are past or are about to pass the peak of oil production, no such scenarios exist for thermal coal on account of its abundance.
   
    
6. Scenario Gameboard
   
   The two variables selected to be the axes for the climate change scenario gameboard are the level of political will and the presence or absence of international co-operation. Combining these variables gives four possible scenarios which were formulated by a group of policy experts recently in London. They outline possible futures after the Kyoto Agreement comes to an end in 2012.
   
   
   
   
   
   1. Dirty Dancing. In this scenario, no new agreement of substance replaces Kyoto. Everybody goes their own way, doing nothing to curb carbon emissions. It's all about the economy, stupid! Energy security, resource nationalism and protectionism rear their heads; and climate change dissidents wage a successful war with the scientific community to sow confusion in the public mind.
   2. Different Dances. In this scenario, some countries (like those in Scandinavia) and some states in America (like California where Arnold Schwarzenegger is now dubbed the 'Greenerator') come to the party with carbon emission reduction programmes (including successful carbon trading schemes). There is no co-ordination between these programmes so they have limited impact, except to provide a role model for other countries to follow. Nevertheless, it's better than nothing.
   3. Dances with Wolves. This scenario unveils a formal agreement with much fanfare but no teeth. Immediately after it is signed, countries - called 'the wolves' - start cheating on the agreement. There is no retribution for their misbehavior because the agreement is vaguely worded and full of loopholes.
   4. Strictly Ballroom. This is the virtuous scenario where countries sign up to an agreement containing clear objectives and targets and keep to it. They waltz together in a co-ordinated programme of action, sharing best practice and new technologies. The US leads the way with China and India in hot pursuit. A global carbon trading market is established.
   
    
7. Conclusion
   
   At this point in time, the world resides in the Different Dances scenario involving outstanding individual contributions but no concerted effort. Some countries who shall remain nameless continue their Dirty Dancing routines. All eyes will be on the meeting in 2009 to signal a new dawn. The final pronouncement from Bali went as follows: "The Conference culminated in the adoption of the Bali roadmap which charts the course for a new negotiating process to be concluded by 2009 that will ultimately lead to a post-2012 international agreement on climate change." Will it be Dances with Wolves or Strictly Ballroom? The judges will adjudicate and the public will cast their vote. Meanwhile, the environment awaits their verdict.

Showdown Scenario

This was first posted on this site in August 2006. It seems like it could be playing out...

September 1st 2006 is the day the showdown starts. It is the day after the UN deadline passes whereby Iran has to categorically state that it is giving up its nuclear ambitions and will furthermore allow the decision to be independently verified. Iran refuses. After much negotiation and consultation, the UN decides to impose a watered-down set of sanctions on Iran. Iran meanwhile declares that it is accelerating its nuclear programme.

Intelligence sources inform the American and British governments that Iran is much closer to creating the enriched material needed for a nuclear weapon than previously thought. It is decided that military force has to be used to stop the programme, particularly in light of the Heathrow terror plot, the war in Lebanon and the Iranian leader's repeated statements that Israel has to be destroyed. An attack is launched on Iran's nuclear facilities wherever they are known to exist. In retaliation, Iran blocks the Strait of Hormuz and the price of oil rockets to 150 US Dollars a barrel.

The world economy comes to a shuddering halt because finally oil has reached a price that cannot be handled. America moves into a sharp recession, followed by China and the rest of the world. The price of gold hits 1 000 US Dollars an ounce, whilst the oil price continues to oscillate around 150 US Dollars until the Iranian issue is settled one way or another. Stock markets together with commodity prices other than oil and gold plunge.

If you give decent odds to this scenario, it's better to be in gold, bonds and cash and not in the stock market.

The Nuclear Gameboard

In a book published in 1992 with the title The New Century, one of us wrote the following: "The growth of fundamentalist Islam poses a serious threat to Western lifestyles and values. This in itself is not a geopolitical problem. It only becomes one if attempts are made by zealots to impose Islam on countries wishing to pursue other paths of development. The attractions to the 'poor young billions' of a religion based on the strict code of the Koran are obvious. It anchors their existence in spiritual certainties when all is flux around them; it gives a clear sense of purpose in a world that for many has no meaning whatsoever; and it abhors materialism, a quality the poor do not possess anyway through force of circumstance. The Middle East, Pakistan, the southern republics of the former Soviet Union and northern Africa are all falling under the spell of fundamentalist Islam. That is a formidable area of influence. How much further it will spread and at what rate is unknown. Equally unknown is whether the spreading of an idea will degenerate into a war of beliefs. A nuclear jihad is not out of the question. Fundamentalist Islam is a wild card with the ability to alter the balance of power in important parts of the world."

This uncertainty, particularly as it relates to Iran developing its own nuclear capabilities, is now uppermost in the minds of Western leaders. As they ponder their options, we'd like to draw their attention to the Nuclear Gameboard we included in Games Foxes Play. The relevant excerpt follows:

It would be true to say that although HIV/AIDS dominates the scene in South Africa and many other developing countries, the developed world has other worries on its plate. Given the tempestuous nature of man, and his propensity for fighting, our world has been, and always will be, pockmarked with skirmishes, battles and wars that dictate the course of history. But there is one threat that is of global significance. It is well known that the current nuclear weapon stockpiles of the few nations who have them are enough to destroy all life on this planet many times over. The future of our existence hangs in the balance, because access to these weapons could dramatically increase over the next fifty years.

We have therefore constructed a gameboard which has peace and war as the horizontal axis and nukes and no nukes on the vertical axis. This leads to four possible scenarios upon which we have plotted past events (solid circles) and possible future events (dotted circles).