
In December 2019 Paul Gilding wrote an article entitled Climate Contagion 2020-2025 which grabbed my attention. The contagion he refers to is an economic collapse brought about by a number of factors. He noted we “are just waiting for the storm to hit. When it does, it will be the climate emergency meets financial contagion. When the global market flips to FOMO (fear of missing out) – from fear of acting too early to fear of being left behind as everyone races for the exits.”
Gilding lists four critical factors “that lead me to conclude this shift in sentiment is now imminent – anytime from tomorrow morning to 2025 but not later.” They are “1. Clean technology is available, scalable, superior and investable. 2. Physical climate change is obvious and accelerating. 3. Public engagement and political momentum are rapidly turning [and] 4. The financial markets are primed” to react.
The article is an appealing, if pessimistic, analysis of market forces operating in the climate emergency and the renewable energy revolution. It is something that as will be destructive with industries and jobs disappearing and new ones appearing and booming – but not necessarily in the same place. This is close to the heart of problem of the ‘just transition’, which, like the climate emergency, our governments are yet to comprehend. Without evidence of any understanding to date, Gilding’s climate contagion in the markets will probably become a grand political crisis as well.
If anything the thesis perhaps underestimates the power of the fossil fuel industry and of governments to prop them up – acting to thwart the market forces by promoting a gas led recovery or investing in the coal to hydrogen project in the Latrobe Valley. The status quo means that governments are already in this business with numerous subsidies, still attempting to bolster and promote the old. Eventually all the fossil fuel companies will become ‘stranded assets’. Whether they can survive and weather the transition will depend on their financial resources and other accounting factors such as being able to write off assets completely. The question remains how long the transition will take and whether it is managed competently or even managed at all.