The intergenerational report – a climate fairy taleAug 26, 2023
The future is already upon us. The forty-year Intergenerational Report (IGR) is a divertissement.
The population, participation, and productivity template of Treasury economists (3Ps framework) is inadequate and unsuited to the already changed world. As is the obsession with growth.
How far out does it seem reasonable to project?
In terms of climate, Australia is not an island continent but just one more population immersed in a global warming phenomena where all are connected to all. It is simplistic to talk up the advantages of the “growth opportunities from advanced manufacturing and the clean energy transformation” in isolation from the overall global level of emissions. If the nations of the world fail to address global warming we all suffer.
A recent study found that anthropogenic warming of 2°C above the pre-industrial period (1850–1900) will be reached in the first-half of 2040s. The rate of increase in greenhouse gases (GHG) in the atmosphere is arithmetical but the severity and intensity of the accompanying impacts increase exponentially. On current performance effective global action to avoid 2°C is highly unlikely. The World Meteorological Organisation’s reports that real-time data from specific locations show that levels of the three GHGs continued to increase in 2022.
The IPCC concluded that limiting warming to 2°C would involve rapid and deep and, in most cases, immediate, GHG reductions in all sectors this decade. The IPCC further stresses this would mean large and sometimes disruptive changes in existing economic structures, with significant distributional consequences within and between countries.
The early 2040s are only two decades away. The IGR lacks a sense of urgency.
Recall that scientists have very high confidence that the risks, projected adverse impacts, and related losses and damages from climate change will escalate with every increment of global warming. The compound and cascading risks will become more complex and difficult to manage. This is no longer a future problem. Every year from now on will almost certainly be worse that the previous one.
Mean near-surface air temperatures over land will vary geographically with some high latitudes likely to exceed 3°C warming by the early 2040s. The scale, severity and urgency of the risks and consequences for major northern hemisphere economies – United States, European Union, China, and Japan -must by now be apparent even to Treasury officials.
The droughts, floods, fires, high temperatures, typhoons, and hurricanes physically battering these nations will become more frequent and intense year-on-year with no respite. Well over half Australia’s trade in goods and service came from these four areas. The knock on effects will be significant. In 2021 more than half of Australian exports came from iron ore and concentrates (29.8 per cent), coal (12.2 per cent), and natural gas (9.6 per cent). The vulnerability of these commodities seem far more serious than the IGR indicates.
The IGR displays unwarranted optimism about the impacts and consequences that global warming will have on Australia in the immediate future, let alone forty years out. A problem anchored in the ongoing misconception that global warming is an economic issue and that markets will save us in the end. The IGR asserts that “Timely investment in climate change adaptation will build resilience and reduce the economic and fiscal costs of climate change in coming decades”. This is an unfathomably benign appreciation of the threat to Australian lives, homes, and infrastructure in the next decades.
Apart from global warming, the economic mindset evinces a great paucity of imagination over the coming impacts of science and technology. It patently is fruitless to project forward forty years as new technologies are now emerging, converging, and accelerating at a rate that is already transforming society. The IGR’s uncritical treatment of new technologies is inadequate.
If there had been an IGR in 1983 the authors could not have reasonably anticipated that the space shuttle program that was kicking-off would lead to today’s space industry, or have guessed the future consequences of the internet that had just been created, or imagined social and economic transformation presaged by the release in 1983 of the DynaTAC 8000x, the first commercially hand-held mobile phone. Projections beyond a couple of years are now likewise spurious. Yet, the IGR’s projections are linear and ignore the risks inherent in revolutionary new technologies.
Artificial intelligence is an example. At a minimum AI will be disruptive and transformative. It will produce many beneficial outcomes. In the IGR’s view “In future Generative AI may improve the productivity of knowledge-based tasks”.
Many AI enthusiasts actually anticipate a new renaissance and new era of enlightenment. On the other hand, there are concerns among well credential experts about the potential for advanced AI to prove destructive and deadly to humans and to pose a threat to humanity and civilisation. The complexity of rapidly developing AI applications are superficially dealt with in the IGR.
Global warming is still treated primarily as an economic issue rather than a matter of science, and the market and market mechanisms are relied on to achieve emissions reductions and foster meaningful adaptation. The worship of growth denies the truth of the sacrifices needed. But the now relentless progress towards 2°C warming in two decades and mostly likely at least 3°C by 2063 refutes the upbeat treatment of climate impacts on human security in the IGR.
Advances in AI, biotechnology, cognitive science, nanotechnology, and robotics – all largely ignored in the IGR – will almost certainly run ahead of government regulation and the fiscal policies of governments. Apart from the economy, there will be issues of equity, access, and justice associated with these developments.
The time has come to reduce the influence of Treasury economists on the priorities of government. The endless growth paradigm has to be abandoned and the science given far more prominence.
The IGR is a 3Ps fairy tale about a make-believe country lying beyond the real world.