‘Extreme Weather’ Ranked as Top Risk, According to World Economic Forum Report
A fire in a favela in Brazil

The world is world is “plagued” by a duo of dangerous crises: climate and conflict, according to the World Economic Forum (WEF) ahead of its annual meeting, in Davos starting on Monday.

“Underlying geopolitical tensions combined with the eruption of active hostilities in multiple regions is contributing to an unstable global order characterised by polarising narratives, eroding trust and insecurity,” notes WEF managing direct Saadia Zahidi, writing in the forum’s Global Risks Report 2024.

Insights about risks were sought from 1,490 experts across academia, business, government, the international community and civil society in September and October last year.

Lethal conflicts from Sudan to Gaza and Israel; record-breaking heat and societal discontent were high on the risk agenda.

Two-thirds of respondents rank “extreme weather” as the top risk most likely to present a material global crisis this year, as well as over the next 10 years.

Misinformation and disinformation emerged as the key short-term threat over the next two years, and is  anticipated to “further widen societal and political divides”.

“As close to three billion people are expected to head to the electoral polls across several economies – including Bangladesh, India, Indonesia, Mexico, Pakistan, the United Kingdom and the United States – over the next two years, the widespread use of misinformation and disinformation, and tools to disseminate it, may undermine the legitimacy of newly elected governments,” according to the report.

“Resulting unrest could range from violent protests and hate crimes to civil confrontation and terrorism.”

Societal polarisation features in the top three risks over both the current and two-year time frames, and is closely linked to economic downturn.

WEF Global Risks 2024

The cost-of-living crisis remains a major concern in the outlook for 2024.

“High rates of job churn – both job creation and destruction – have the potential to result in deeply bifurcated labour markets between and within developed and developing economies,” notes the report.

Meanwhile, interstate armed conflict, with the report warning of “conflict contagion”.

The report also flags the global South’s growing “dissatisfaction with the continued political, military and economic dominance of the global North”.

“Historical grievances of colonialism, combined with more recent ones regarding the costs of food and fuel, geopolitical alliances, the United Nations and Bretton Woods systems, and the loss and damage agenda, could accelerate anti-Western sentiment over the next two years.”

Over 2,800 leaders are convening in Davos under the theme, Rebuilding Trust, and will focus on achieving security and cooperation; growth and job creation, artificial intelligence and “a long-term strategy for climate, nature and energy”

Reduce energy demand

Transition to solar would help companies’ energy demand

Meanwhile, the WEF has also called on companies and countries to adopt measures to reduce the demand for energy in order to reduce carbon emissions and save cash.

The forum made the call to reduce what it calls “energy intensity” – the amount of energy used per unit of gross domestic product (GDP) –in a new report that was also released on the eve of its annual meeting.

A 31% reduction in energy intensity and up to $2 trillion in annual savings is possible if certain measures are taken, according to modelling.

“Actions are doable today, at attractive returns with existing technology, and so it is believed this establishes a compelling case to act as much on energy demand as supply in the journey to net zero,” according to the report.

It describes three “levers” to reduce energy use. The first is “energy savings”– essentially through operational improvement interventions. 

The second is “energy efficiency” measures that require capital expenditure. 

The final lever is “value chain collaboration”, where companies work directly with suppliers and business partners to reduce cost. 

The WEF calls on each sector to develop a “roadmap” to guide company and government action. 

“Company and national energy transition plans are needed to capture the benefits of managing energy consumption while integrating supply-side actions. Businesses across the energy demand and supply spectrum will need to work together with governments to develop these plans and increase awareness of the routes and results available to address barriers to action.”

Some of the examples of reduced energy include the digital optimization of plant operations, and automation and electrification of transport in mining and extractive industries, which use  around 8% of global energy. 

The vast majority of energy use in mining – some 93% – is used for extraction, intra-mine movement and crushing, all of which are equipment focused. 

“An automated truck network has the potential to save 15-20% of transport energy demand, through the optimisation of routing, uptime and throttle input,” according to the report.

Tensions between security and sustainability

“The energy transition creates immense and growing tensions between the imperatives of security, affordability and sustainability,” according to the report.

“On energy security, the first challenge is to simultaneously maintain a secure and stable supply of energy amid an increasingly volatile geopolitical situation, all while transforming today’s hydrocarbon-dominated supply,” it adds.

During 2021-22, energy shortages as a result of Russia’s invasion of Ukraine saw European governments procuring oil and gas from the flows normally destined to other emerging markets and developing economies (EMDE), which had to use more coal and face higher energy prices. 

The second challenge is affordability, particularly the population is expected to expand by two billion people and GDP is set to double by 2050.

“This will intensify pressure on energy supply systems, particularly in EMDE, which are responsible for approximately 60% of current demand. These markets need a clear range of routes to economic growth, which include abundant access to affordable clean energy,” notes the report. 

The third challenge is sustainability to meet this growth in energy demand in a way that keeps the world on track to meet the 2050 Paris Agreement. Most scenarios forecast a significant shortfall in clean energy supply by 2050, which is why more efficient energy use is imperative.

Image Credits: Zubair Hussain/ Unsplash, Denys Argyriou/ Unsplash, WEF.

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