We Need Growth, Not A Recession
Dec 24, 2022
Previously published on Forbes.com
Generations Y and Z, your time has come to step up to the plate and take responsibility for the biggest growth opportunity in human history. Unfortunately, it starts with facing global challenges that are causing a lot of anxiety. Carbon emissions still haven’t peaked, and we are on track to a catastrophic 2.7° C of global warming by the year 2100. Meanwhile, the world population will grow from 8 billion people today to 9.7 billion by 2050. Demand for food will increase by about 40%, and demand for freshwater by 30% while global water supplies decline.
How you contend with these megatrends in carbon, population growth, food and water will define the future. Your opportunity is to overhaul the fossil-fueled economic order we built over the last two centuries. You now have 30 years to get the job done. It will take a tremendous amount of innovation and economic growth. Financing it will take a substantial portion of the world’s annual GDP. In its 2022 New Energy Outlook, BloombergNEF reported that the transition to a net-zero emissions world is an investment opportunity worth almost $200 trillion by 2050, or about $7 trillion per year. It’s an outsized super opportunity. But…failing is not an option, because if you fail, humanity will be in deep, deep trouble.
Don’t be intimidated but be warned that the economic and political establishment will try to stymie your efforts at reinvention. They are pleading for an “orderly” transition to whatever they think your future should look like. They will hang on for as long as possible to their privileged positions and assets while harvesting profits and misusing recession fever for overly aggressive job cuts. There will be global supply chain issues as many countries turn more inwards.
Central Bankers will threaten the speedy growth you’ll need to succeed by using the sledgehammer of generic interest rates to tame inflation. Though well intended, they’ve merely copied former Fed Chairman Paul Volker’s playbook from the 1980s—even in today’s tight job market—because they don’t have any more refined monetary policy alternatives (yet) that would force some sectors to retract while allowing those critical for the future to grow. Elites are largely OK with the interest rate hikes because they are mostly shielded from the consequences. Pensioners and have-nots will suffer most. The bottom line is that if the Fed and its counterparts Volkerize the economy, you will have less time and capital to scale innovations that address the four megatrends.
Building a New Economic Order
Your response to the four megatrends will shape what it means for human beings to survive and (hopefully) flourish on this planet in 2100.
The effort to ditch fossil fuels and electrify everything will produce many more startups and well-paying jobs. Cleantech will flourish. Just addressing the 50 billion metric tons of greenhouse gases we emit every year through point-of-source and direct-air capture will be a multitrillion-dollar opportunity—and more if we count the reuse of the captured carbon.
Providing safe, nutritious food for 9.7 billion people will require advances in biochemistry, AI, robotics, urban farming and animal product alternatives. Livestock provide only 20% of global calories yet generate 14.5% of greenhouse gas emissions, use 80% of worldwide agricultural land and consume 10% of annual freshwater supply. Economic development traditionally coincides with increased demand for dairy products and meat, so changing our food system is urgent and represents significant job growth.
In 2025—just two years from now—over half the world’s population will live in water-stressed areas. They will need new wastewater treatment systems, desalination powered by clean energy and geoengineering projects to conserve run-off water and bring it to areas of scarcity. And many areas will need more protection against rising sea water levels.
Finally, population growth will require new forms of housing that people can afford, built with clean or carbon-free steel (responsible for 11% of today’s CO2 emissions), concrete (8%), plastics (3.4%) and new composite materials. It will require energy-efficient air conditioning to cope with rising temperatures and new systems to protect against wildfires and destructive rainfall. It will require megacities to accommodate the biggest human migration in world history, as environmental, political and economic refugees grow to numbers never seen.
Why You Will Win
I am convinced you will succeed in reinventing the world economy, firstly because you will have to live through the transition dictated by these megatrends. That will make you extra motivated to find solutions. Fewer of you are willing to languish in low-impact middle management jobs. You want real action, with real impact and you want it fast. While big consumer tech is laying off thousands of employees, members of your generation are launching and joining impactful startups in record numbers. These startups typically have diverse, global teams, laser-focused on achieving their goals.
Second, as you ascend into positions of leadership in business and government, I expect you to shake up the status quo. I see your peers at leading oil and gas companies already challenging their aging CEOs to invest their Ukraine War profit windfalls into new energy solutions that can preserve their company’s leadership position for decades to come instead of paying out dividends and share buybacks. Young heads of states in Finland, New Zealand and elsewhere are pushing for more aggressive and just climate policies with your backing.
Third, the global community still comes together when the stakes are highest. People worldwide rallied to collaboratively research and share COVID-19 vaccines in 2020, sparing countless lives. People have united against Vladimir Putin’s senseless, unprovoked war. Meanwhile, the women of Iran and workers in China are protesting for a better future, cheered on by supporters worldwide. Sooner or later, the world will rally to address the four megatrends.
Fourth, I am encouraged by the boom of innovations weaving biology, physics, chemistry, IT, AI and economics into an interdisciplinary revolution. Carbon-free concrete, cultured meats, fermented proteins, biofertilizers, sustainable aviation fuels (SAFs) and more show immense potential to decarbonize, feed, hydrate and house our societies of the future.
It Won’t Be Easy
I’m sorry, Generations Y and Z, that the task to replace the old economy and fight climate change lays squarely on your shoulders. And I’m sorry that 9.7 billion people are counting on you to succeed. The next 30 years could be tragic and tumultuous. There will be more floods, droughts and conflicts. Climate refugees will migrate from south to north. Old jobs and industries will disappear.
Trust that on the other side, innovation will bring about a Golden Age of Growth in human history. Trust yourself to challenge the powers that be and do what must be done. It’s your turn.