Despite the UN Secretary General’s concern that the climate battle is being lost, a prolonged Russian invasion, a debt crisis, persistent inflation, and an ever-present pandemic, the mood at the World Economic Forum in Switzerland was surprisingly positive, according to The Guardian’s Economics Editor Larry Elliott.
The optimism, Elliott writes, comes from a longing for good news and some evidence that it may be imminent. For starters, inflation in the U.S., the U.K., and the eurozone appears to have peaked, allowing central banks to slow their interest rate hikes. Second, Elliott says, China has responded less horribly than expected to its lifting of strict COVID-19 policies. And, the International Monetary Fund (IMF) appears poised to revise upward its 2023 global growth estimate, though the change in outlook won’t be extraordinary.
The news is, things may just have not gotten worse, according to IMF Managing Director Kristalina Georgieva.
Another reason for optimism, Elliott writes, is continued technological development, notably in artificial Intelligence (AI), which was viewed in Davos as helpful in the fight against global warming. A paper by Nicholas Stern and Mattia Romani made the case that the world had “a new growth and development story driven by investment and innovation in green technology, boosted by AI,” which is becoming an all-purpose technology, like electricity or IT.
AI is already being used in crop analysis and in improving climate disaster alert systems. It will make decarbonization easier by accelerating “tipping points and the deployment of breakthrough technologies across economic sectors — such as fusion and solar, quantum chemistry, alternative protein design, and many others,” according to the paper.
Also, Stern and Romani said that in the U.S., the cost of energy generation for solar, wind, and short-term battery storage will fall below the cost of new coal and gas in 2023. Other countries will likely follow soon.
And, unsubsidized battery-powered electric vehicles (EVs) are forecast to achieve cost parity with internal combustion engine vehicles by 2025-26.