“Every lie we tell incurs a debt to the truth. Sooner or later that debt is paid.”

This quote is from the finale of the searing TV show, Chernobyl. Here it references the initial denial and obfuscation of reality by authorities when faced with the seemingly impossible situation of a nuclear meltdown. This dark principle of human crisis management echoes back and forward through the ages. Covid-19 is a contemporary version. For the same reason Leo Varadkar was able to state with confidence that there will be a Covid-19 surge before it happened, I will state with confidence that there is a far greater threat than Covid-19 due to surge in the coming years, if not already surging.

In order to make a complex, multi-faceted subject digestible I’ll attempt to answer the following questions:

  1. What happened as we saw Covid-19 coming towards us and what we can we learn from the various global responses?
  2. Why climate change is the next crisis, and how we can prepare for that by learning from the mistakes of Covid-19.
  3. What we are going to have to do next to get out of this mess.

Measurements and black swans

To his credit, Varadkar was one of the first global leaders to speak so plainly of what was to come. The direct, clear prediction was powered by models. As is often said, all models are wrong, but some are more useful than others. Models with fast feedback loops enabled by improving measurement systems tend to become accurate quite quickly, as we have seen with Covid-19. We are now at a stage where most international leaders are also predicting surges, peaks and talking about flattening curves, all narratives derived from modelling.

An event with no precedent is considered a black swan, it cannot be modelled. In statistical terms, a white swan is an event that gestates over time, can be predicted with modelling and becomes easier to predict as measurement data grows. Covid-19 is emphatically a white swan. As many articles have pointed out, experts have been predicting a pandemic like this for well over a decade. Eighteen million people watched Bill Gates clearly make the prediction in an online TED talk before it became reality.

The earliest paper I found starkly warning of the danger came from the University of Hong Kong, published in 2007 and contained the following paragraph:

“The presence of a large reservoir of SARS-CoV-like viruses in horseshoe bats, together with the culture of eating exotic mammals in southern China, is a time bomb. The possibility of the re-emergence of SARS and other novel viruses from animals or laboratories and therefore the need for preparedness should not be ignored.”

Covid was forecasted multiple times by many different experts in different regions, the warning was repeated many, many times. We even got some warm-up exercises with the SARS (2002), Swine Flu (2009) and MERS (2012) outbreaks. This was generally ignored, most raising an eyebrow before returning to market news, sports, politics, pop culture, whatever.

The Chinese Government had sufficient information to act decisively in December 2019 and chose not to act until January 2020. The rest of the world had sufficient information to act in January 2020 and mostly chose not to until March 2020, with some economies still struggling to take the crisis seriously today in spite of the visceral horror occurring globally. This type of decision-making has seen the tens of millions that needed to be spent in January become trillions in April.

Poetically, South Korea and America both had their first cases on January 20. South Korea, with muscles built from the prior outbreaks, understood the need for rapid measurement to enable track and trace programmes. Within two weeks they had a functional test thanks to a government initiative including over 20 private companies. Permitting private and public labs to conduct the test meant they had the fastest testing rate in the world, and today have the second-highest test rate per capita after the UAE. This, allied to strict lockdowns, meant they were able to track the outbreak more accurately than any other country at the time, enabling them to rapidly control and react dynamically to the outbreak. Countries that have followed or eventually adopted their approach have seen similar or even better results.  

When the experts predict a major, economy-disrupting event, there is always a handy rating agency, politician, think tank, television network or other body that will say everything is just dandy.

Meanwhile, in the US, there was little or no measurement taking place. In the modern fashion, the experts were ignored and the fast-talkers focussing on profit margins, market fundamentals and preservation at the expense of humanity prevailed. Their claims that there was nothing to worry about, that they have the best healthcare system in the world so the impact would be little different to the flu carried weight as there was not much measurement available to prove otherwise.

Of course there was, outside America, but as these were not American tests on Americans, the numbers were received with nationalistic cynicism and hubris instead of open-minded enquiry. Rather than creating a track-and-trace system, expanding ICU capacity and encouraging social distancing or lockdowns, the Trump administration responded by cutting CDC spending in February 2020, not long after the World Health Organization had declared a public health emergency. Nature is not swayed by human constructs like wealth and nation states, nor short-termist, agenda-driven lies and marketing, only reality. The Global Health Security Index recently gave America the world’s highest score for pandemic preparedness. America has fewer ICU beds per capita than Ireland and Italy.

When the experts predict a major, economy-disrupting event, there is always a handy rating agency, politician, think tank, television network or other body that will say everything is just dandy, ignore the negative people, keep growing and making money – that’s all that matters. We saw this in 2007 with the cacophony of groups saying everything will be fine when experts predicted disaster, we see it today with some still reporting that we are over-reacting to Covid-19 and to end lockdowns while around the world bodies pile up outside hospitals, funerals are banned and America is the new epicentre of the crisis.

The US administration is currently trying to blame China and the WHO, akin to blaming Smith & Wesson for shooting yourself in the foot. Telling nature you are the wealthiest, the greatest and it’s someone else’s fault anyway is just shouting in an empty room. As more Americans have now died from Covid-19 than died in the Vietnam War, the tub-thumping emperor is not just naked, he has been flayed… yet with bloodied hands still he thumps.


The crisis to come

So now to another white swan that has been predicted and ignored for far longer than pandemic readiness, the ledger showing perhaps the greatest debt to the truth that humanity has ever built. I am of course talking about the climate crisis. The sad thing is most readers will have heard a lot of this before, but clearly it warrants repeating so you can hear how it rhymes with pandemic denial.

We started theorizing and making connections between carbon cycles and impact on global temperature in the 19th century. This led to the concept of the greenhouse effect becoming crystalised and much discussed for the subsequent decades. Discussion turned to alarm in the late 1950s and early 1960s. The Keeling curve was developed, demonstrating clearly that atmospheric CO2 was increasing. This was followed by a 1965 Science Advisory Committee report under US President Johnson, “Restoring the Quality of Our Environment”, confirming the link between atmospheric carbon increase and climate change. Private industry wase aware of the issue at this time also, with a 1968 Stanford Research Institute report confirming the phenomenon commissioned by the American Petroleum Institute.

Again, all models are wrong, but some are more useful than others. A UC Berkeley report in 2009 examined 17 climate models from 1970 to 2001 and found that 10 of them had no significant statistical difference between their predictions and reality – in other words, they were accurate. Of the remaining models, the least accurate was wrong by 0.1 degrees celsius per decade.

I predict this as confidently as Leo predicted the Covid-19 surge because I believe the models, I believe the numbers, they have been accurate for 50 years and we have been ignoring them.

Now we are back to measurement and feedback loops. If anything the climate models are too conservative, struggling to factor in irrational human behaviour and potential acceleration events we can only hypothesize. Every time we introduce a new measurement tool for climate, we find things are worse than we forecasted and we need to update the model. Polar ice caps? Melting faster than predicted. Same for permafrost thawing. Ocean acidification is faster than expected too. All our life, mammals, insects, fish, fowl or any phylum you name are going extinct at a pace that seems impossible and faster again than predicted, but it’s really happening.

Does this sound familiar? Every time we increase testing we find there is more Covid-19 than we expected or initially modelled. Like Covid-19, only acceptance of reality can save us – that hard work, unimaginable cost and sacrifice can flatten the curve to preserve the world in a state we would like to leave for our children, their children and so on.

Today most experts say we are on course for at least a 3°C temperature increase by 2050. This world will not be recognisable to the one we live in today, children born in this time will struggle to believe the idyllic stories we tell them about our own childhoods. In other words, what we are experiencing now with Covid-19 will be like a short rain shower on an otherwise sunny day compared to the barely believable misery and suffering that is to come in the next 30 years. I predict this as confidently as Leo predicted the Covid surge because I believe the models, I believe the numbers, they have been accurate for 50 years and we have been ignoring them.

So now we can return to surges, peaks and flattening the curve. The surge is now, we do not know when the peak will occur because we haven’t started taking the problem seriously. Here’s the curve we need to flatten and then send downward:

As you can see from the above curve, like Covid-19, it’s currently accelerating while it needs to be flattened, so if we say now is not the time we are once again being dishonest with ourselves. The stimulus response to the Covid-19 crisis will define whether humanity thrives and goes on to fulfil our potential or we get to enter slow, civilisation-level decline with an opportunity to become the most interesting fossil record since the dinosaurs.  

This may sound alarmist, but the scientific/numerical reality is that we have far less time to become a carbon-free economy than most realise. Carbon budgeting is a form of reverse-engineering the emissions that will lead to a greater than 1.5°C temperature increase in order to see how much carbon we can “spend” before reaching this point. The IPCC currently estimates that based on today’s emissions we have 10 years to reduce our carbon emissions by 55 per cent. They say this gives us only a 60 per cent chance of success.

If we address it in a timely fashion we can expand global GDP to unprecedented historic highs.

What this actually means is we have 0 years, not 10. From the chart you can see carbon emissions are increasing aggressively, so “today’s emissions” is not a good calculation metric. We have 10 years if from today no one ever buys another fossil fuel car, no fossil fuel power plants are built, no non-electric home-heating control system is ever installed, no non-LED lightbulbs are purchased and so on.  So clearly we do not have 10 years. In actuality, we need the correct carbon-free tech for every purchasing decision starting this year – but this is not possible and not happening anyway.

In other words, normal market rules cannot apply. If we attempt to solve the problem this way we will fail. A good example is the Carbon Tax – it would have been great if introduced 20 years ago, even better if introduced when the experts started confidently predicting the problem over 50 years ago, or even as part of the stimulus response to the financial crisis. Today it will simply be too slow – we had the opportunity to price climate into the market but instead dithered and failed. People are saying Covid-19 is our generation’s World War, it’s not – climate is.

It is also an incredible, once-in-a-generation opportunity. If we address it in a timely fashion, we can expand global GDP to unprecedented historic highs, but we need to ignore the same people who told us not to worry about Covid-19. They also tell us addressing climate correctly will destroy our economy, or even that the crisis does not actually exist. Using various tricks like marketing, political lobbying and “think tank for hire” reports masquerading as science, industry incumbents and their lackeys tend to gaslight society into believing that if they fail, society will fail too.

They will try to fool us into believing that products which are cheaper, require fewer resources to build with less chemical processing and utilise less energy over their lifetimes are somehow bad for business and can negatively change your way of life; that having an electric car is some form of assault on the traditional way of life, say. In reality, what’s good for the environment is generally good for the consumer and business, just very negative for those companies that are not equipped for the new economy. And we have seen all of this before. So what stimulus response makes sense now we are in wartime economics?

Wind down the past, accelerate the Future

The financial crisis stimulus response was one of market fundamentalism. We decided that society served the economy, a perversion that saw humanity suffer to prop up what are essentially business memes, abstractions. Following the intellectually bankrupt theory of trickle-down economics, we gave what we then thought were inconceivable sums of money to industries that had no intention of change. The subsequent austerity programmes enabling the industries that caused the problem to carry on as usual saw a reduction in public services, growth of distrust in government and led to a stalling to the systematic increase in life expectancy for the first time in a century in our most modern democracies.

There is a grim irony that many of those places worst affected by Covid are partially due to public service inadequacies thanks to cut-backs required to bail out the finance industry. In 2008, we had to modernise the financial system to prevent a recurrence of the systematic failures which led to the financial crisis. Due to the failure of the stimulus response, we now still need to fix the financial system, but now also wealth distribution and, most crucially, climate. If you have any lingering doubts regarding how badly this stimulus package failed, consider this statistic courtesy of the Federal Reserve Economic Data (FRED) provided by the St Louis Fed: in aggregate, every $1 of growth since 2008 cost $1.50 to generate, or $11 trillion was spent to generate GDP increases of $7 trillion.

The post-2008 stimulus regime reminds me of stimulus packages post-WW1, known quantities designed to keep things as they were before WW1. Post WW2 it was realised that in order to rebuild the world we need wide-ranging economic stimulus packages that had never been tried before. There was no other choice due to the smoking ruins many places in the world were reduced to. We had to do things people had previously said was impossible.

The success of these packages fueled almost 75 years of largely uninterrupted economic growth and improvement in human welfare. Hundreds of millions were permanently lifted out of poverty thanks to a 10-fold increase in global GDP since 1950. We can do this again if we choose to. And it is a choice, one that can only be powered by collective will. This time, the economy needs to serve society, as it was always intended to do. A well-functioning economy should not destabilize regularly and require compounding human suffering to maintain it. We need a planned approach to dis-incentivise industrial and market activity that has no connection to planetary welfare and disproportionately benefits the most wealthy at the expense of those most in need. The economy is merely an idea civilisation has agreed on, we can adapt and change it as we see fit. Adapting it to promote the intertwined issues of human and planetary welfare seems fit.

The wave of socialist modern monetary theory and universal basic income-type policies enacted by right-wing governments around the world may provide hope to some that the lesson may be learned. Others may marvel at the wildlife returning to cities, at the clearer urban skies and waterways. “There can be no return to normal because normal was the problem in the first place…” This sounds like Bernie Sanders’s response to the crisis, but it was actually Henry Kissinger. Strange times indeed. All this said, don’t be fooled, the models and numbers are still accurate and the devil is in the detail of most of the new stimulus packages, the environmental improvement shallow and unsustainable.

Before exposing issues in some of these stimulus packages, let’s list the outcomes we need to address the various financial, social and climate issues. Most of the suggestions result from analysing this wonderful chart of energy flow through the US and extrapolating the principles globally. There has been dialogue as to whether stimulus should be targeted at the top level (government bail-outs), mid-level (industry bail-outs) or low-level (citizen bail-outs). Given our global, connected new reality and that we have no time, it is clear we need to follow a subsidised substitution programme at all levels as follows:

New Deal – public infrastructure

This one is quite simple – we need to electrify all consumer goods. This means we change our personal transport to electric vehicles, our home heating to heat pumps, our lighting to LEDs and our cookers to induction heating. In addition to energy saving, electrical consumer goods have fewer moving parts, are longer lived and require less maintenance, amplifying the long-term benefits. Not only this, a subtle impact is that the mining, refining and transport of the fuels required for the previous generation of consumer goods is no longer required.

This collectively  implies a 50 per cent reduction in energy use with no compromise in lifestyle. All the technology we need already exists. The reduced costs of electrical products also creates additional spending power in an economy. For example, if all the electrical goods above reduce US household overheads by just $1,000 (the real figure is probably larger), this introduces $128 billion of additional spending power to the economy annually

For this to happen, firstly governments need to introduce an aggressive phase-out of non-electrical consumer goods so the only option is an electrical one.

Secondarily, for less brave, slow phase-outs, we need a subsidy programme to ensure electrical products are cheaper than their fossil fuel equivalents to ensure near-universal electrical purchasing options are taken. We also need loan programmes to encourage households to swap old fossil fuel-powered consumer goods to modern electrical equivalents. The loans simply need to be configured such that the cost-benefit of ownership is spread over a number of years, so the cost of loan is covered by operational cost-savings before entering into a “profit” phase for the consumer once the loan has been repaid.

I say “simply” as this was precisely what some of the New Deal programmes and their post WW2 descendants facilitated, enabling US citizens to own their own homes, a car, indoor plumbing and benefit from the wonders of home electricity. We need to do this again for electrical consumer goods.

Private industry in war mode – private infrastructure

In the same manner private industry was co-opted into becoming a war machine for World War 2, we need private industry to become a war machine against the climate crisis. Indeed the Trump administration has already inadvertently begun this step with the enactment of the Defense Production Act, but it needs to be significantly amplified and focussed on the correct problems.

The big problem here is, of course, fossil fuel energy generation. The first requirement is that no new fossil plants are built while phasing out the existing fossil fuel generation system. We then also need to cease fossil fuel exploration and exploitation.

The good news is this may be easier than people think due to how weak global energy company companies are right now. We have just seen a historic deal signed to reduce the amount of global oil produced in a pathetic and inherently futile effort to prop up its price. The reason the price needs to be supported is that the cost of extraction and transport is now greater than the price of the oil itself. Full oil silos mean in some places energy companies are paying customers just to take the oil away – in other words, negative oil value. Funnily enough, the market fundamentalists encourage this type of market manipulation in addition to the billions in subsidies fossil fuel companies already receive, but not market manipulation that promotes renewables.

Even with the pro-fossil fuel market manipulation environment, renewables are still winning. Bloomberg NEF’s New Energy Outlook 2019 reports that wind and solar are the cheapest form of energy in 66 per cent of the countries on earth as well as being faster and more simple to construct and maintain than any fossil fuel alternative. Given how rapidly this has happened over the last five years, we can expect to approach 100 per cent in the next five years.

Image from Bloomberg NEF New Energy Outlook 2019

Clearly then, we just don’t need to build more fossil fuel power and should be just building renewables allied to new energy storage techniques. It is impossible to beat an energy system that has zero cost and transport-free fuels with one that does not. Ignoring this fact is simply madness.

Furthermore, the International Energy Agency has recently confirmed that the only energy generation assets unimpacted financially by the Covid-19 crisis have been renewables. There will be further economic shocks in the future and what this tells us is that the economic models of renewables are systematically less fragile in the bad times than their fossil fuel equivalents.

For flights beyond 500km and the larger shipping lanes that cannot be battery powered, we need to inject capital into the hydrogen economy, accelerating its maturity.

To this end, an interesting thing happened on April 3. New York State, which would be the world’s 11th-largest economy if it was a Nation-State, announced aggressive plans to focus its Covid-19 stimulus recovery on renewable energy generation as part of the 100% Clean Energy Collaboration, which includes California (the world’s fifth-largest economy), ignoring existing Federal planning and guidance. On the same day, a number of America’s leading oil CEO’s went cap-in-hand to the White House to discuss the plight of their industry, requesting urgent help.

I suggest the help they should receive is that the Government ends all fossil fuel subsidies and offers to buy out their proven oil reserves. In exchange for this stimulus capital they become renewable energy companies, they are no longer permitted to explore, extract or refine fossil fuels and they must phase out all existing fossil-fuel generation, starting with the dirtiest (coal) and ending with the cleanest (non-shale gas). I detail what happens if they say no in “The bold step” section below.

So the big beast is energy generation, but there are some other significant areas we must address. There needs to be an incredible amount of batteries in the future. For example, to fully electrify the American vehicle fleet by 2035, we need approx 90 billion battery cells per year. When you add in the rest of the world’s transport and energy storage, it’s an astronomical number.

For flights beyond 500km and the larger shipping lanes that cannot be battery powered, we need to inject capital into the hydrogen economy, accelerating its maturity. All the key components are in place, they just need ample finance.

In addition, we also need to electrify agriculture while introducing an industrialised regenerative farming system independent from the choke-hold of the large seed and chemical companies. Most of agriculture has been loss-making for over five years, so this will be incredibly expensive and impossible without large-scale subsidy plans.

Finally, decentralised waste management systems designed to end the practice of sewage run-off simply being sent to sea (the UN estimates this to be 80-90 per cent globally) must be systematically introduced. The waste can be harnessed to power buildings through capturing the methane, the liquid can be recycled as grey water, with the remaining by-products are suitable as brick material or fertiliser. Non-scientific, cultural bias against logical waste treatment needs to be ignored, we need to hold our nose and do what makes biological sense.

Manhattan Project – material economy

An enormous R&D effort, as well as a new legislative framework, is required to switch our input economy from a linear one to a circular one. I’ll be devoting an entire article to this, but for now, I list the basic issues.

Most of the environmental issues caused by the construction, consumer good manufacturing, pharmaceutical and agricultural industries are primarily due to their inputs rather than their processes. The primary problem items are cement, steel, aluminium, refrigerants and agricultural inputs like fertiliser, herbicides and pesticides

Each of these items needs to be substituted with something that can be easily recycled, can be sustainably derived and, ideally, sequesters carbon.

An easy example is building material made from plant cellulose grown in a regenerative agricultural system. We use a plant waste by-product from a process that improves soil health to create a brick, say, that acts as a carbon sequester and when decommissioned can be added to a landfill that it will actually fertilise once broken down

A global materials body mirroring the WHO would make a lot of sense. Any time a new material is proposed for commerciality, like graphene, it must come with a circular plan that the Global Material Body can ratify or suggest changes. All currently used materials would also have to go through the same process and either develop a clear circular plan or be mandated for substitution by a different circular material that fulfils the same function.

Currently, most materials companies are primarily concerned with the correct material at the correct price. Recycling is mostly window dressing that is avoided as it creates impurities in traditional materials. Without stern oversight, it is very unlikely these companies will adapt in the required time-frame – if at all.

Any of these companies seeking stimulus should be only granted on condition of accepting the oversight body’s authority as well as agreeing to decommission non-circular materials within a defined time period.

Marshall Plan – scaling globally

The IMF, UN and G20 group need to ensure all countries can follow the above plans, especially the developing world. This will require them to accept that normal market rules do not apply for now. There has been some hope recently as in April, the IMF agreed to a payment of US$500 million to write off six months of 25 of the world’s poorest companies debt repayments.

This is just a beginning as it will likely require tens of trillions for the developing world to develop sustainably over the next 20 years and beyond. For this to happen, I believe the IMF will need to agree some form of Perpetual Bond as put forward by George Soros. This would see bonds with no repayment date issued to finance the change required for developing nations. So while the bond purchaser earns interest on the bonds that the IMF would have to pay, there is no cliff for ultimate repayment of the bond. Bonds like these that were used by the UK to finance the Napoleonic Wars were finally repaid as recently as 2015. Using a 0.5 per cent coupon rate, this would enable the IMF to deploy stimulus increments of $1 trillion at the cost of $5 billion annually. Some version of this seems required to address the mind-boggling numbers being discussed. Currently, there seems no obvious alternatives.

There is very sound economic logic to supporting the developing nations also. I like the Australian moral philosopher Peter Singer’s concept that over time, human society expands its umbrella of moral concern to include increasing numbers of peoples and “things”. This is tied to the notion of perpetual human progress – that technology and economic advancement increases the burden on those that achieve it to bring the rest of the world along with them, or the progress is not sustained. These aren’t new ideas, really, remembering the previous point about the people lifted from poverty via the post-WW2 stimulus programmes. With a tip of the hat to the markets, lifting people out of poverty also creates new consumers like those that powered the post-WW2 recovery, so we can easily make arguments beyond the moral to encourage stimulus here.

With this in mind, I am surprised at the relative lack of commentary on the developing humanitarian crisis due to Covid-19 in the developing world. Remember, absence of measurement does not mean absence of infections. Away from social distancing, the best defence against Covid-19 is soap and water. The NGO WaterAid reports that 75 per cent of households in developing countries do not have access to somewhere to wash with soap and water. With no measurement, scarce medical facilities that barely warrant the name and no money, what hope does the developing world have in battling Covid-19?

Beyond this, a thought exercise I like to present people with is that if the developing world switches to regenerative agriculture and the EU does not, civilisation as we know it continues indefinitely. Vice-versa, civilisation as we know it ends due to food shortages from the eradication of top-soil over the next 30 years. Similar arguments can be made to industrialisation, transport and energy generation.

It is very hard to see this clearly with a Western bias, but the sustainable development of the developing world is more important than pivoting the Western world to sustainability. Our stimulus policies need to reflect this and we can be rewarded with over 4 billion sustainable new consumers from the developing world, dwarfing the hundreds of millions that rose from poverty to give us a 10-fold increase in global GDP post-WW2. So we get payback on our investment many times over, just decades beyond the horizon of your standard four-year political cycle.

Tomorrow: The role start-ups can play, mistakes we are already making and how to avoid them, before specifically addressing the Irish stimulus response.