Soaring High Or Scorched Earth? 5 Trends For The Year Of The Dragon

Soaring High Or Scorched Earth? 5 Trends For The Year Of The Dragon

By Debra Tan, Dawn McGregor, Chien Tat Low, Dharisha Mirando, Sophie Lam, Yisih Chai 22 February, 2024

The Dragon is the most powerful animal in the Chinese zodiac so we can expect a strong year with little to no let-up. Is 2024 the year for soaring high or will we go down in flames? Find out in our 5 trends for the Year of the Dragon

Soaring High or Scorched Earth? 5 Trends for the Year of the Dragon

The Dragon is the most powerful of the Chinese zodiac animals so we can expect a strong year with little to no let-up. There’s good news …the Dragon also brings courage, innovation and luck, all of which we will need this year to speed-up climate action, limit emissions and avert climate breakdown.

Is 2024 the year for soaring high or will we be rained on; or worse still, go down in flames?

In 2024, as a new multipolar world order is shaped, we will have to contend with two types of dragon – the fire-breathing and all conquering “western dragon” as per Game of Thrones or the scaly, naga-like benevolent “Eastern Dragon” that controls water. As you can see, they cannot be more different.

So, is 2024 the year for soaring high or will we be rained on; or worse still, go down in flames? But before we dive into what lies ahead in the year of the Dragon, let’s see how we fared with our predictions for the year of the Rabbit…

What we said in the Year of the Rabbit…

We said 2023 could have gone 2 ways – “mad hares in a multipolar world can lead to wars” or we could be “happy bunnies” and “aim for peace & harmony”. Clearly, we hopped along the “mad hare” path. We didn’t know how right we would be when we said: “as the Global South and organisations like BRICS grow, the G7/NATO may find themselves becoming less influential as the rest of the world may no longer blindly follow their agenda”.

Clearly, we hopped along the “mad hares in a multipolar world can lead to wars”

Sadly, in addition to the Russia-Ukraine war, explosives equivalent to 2 nuclear bombs rained death & destruction on the population of Gaza – and that was as of 2 November 2023 according to the Euro-Med Human Rights Monitor; it’s now mid-February 2024 and the war is still ongoing.

As we transitioned out of 2023 into 2024, these wars, Donald Trump and Taiwan’s election monopolized the news while the fact that we finished the year at an alarming 1.45°C of warming above pre-industrial levels received little attention. In short, we were at the tail-end of the Rabbit even more “hare-raisingly close to the end of the world, not just from nuclear war, but also from climate breakdown.”

You don’t need to be a scientist to know that “climate hell” is already here. On this front, we predicted there will be “White Rabbits galore” as we realise we are late to adaptation because “water risks will hit everyone, everything, everywhere, all at once”. We wished we were wrong but unfortunately climate events did outpace adaptation and like wars, brought death, destruction and displacement.

We wished we were wrong but unfortunately climate events did outpace adaptation…

…there were scorching heatwaves, killer fires and destructive droughts & floods

Twelve typhoons/cyclones/hurricanes/storms alone displaced over 2.5 million people and knocked out power for 4 million. The dozen were Typhoons Doksuri, Haikui, Koinu, Lan and Saola in East Asia; Cyclone Gabriel in New Zealand, Hurricanes Otis & Lee in the Americas and Storms Daniel, Babet, Ciaran & Debi across Europe & North Africa. Economic losses and damages caused by these amounted to over US$60bn … and that’s just from these 12; according to NOAA, there were 78 named storms in 2023.

Meanwhile, killer heatwaves, droughts and wildfires raged. New research from the Australian National University (ANU) showed that heatwaves gripped 77 countries which experienced their highest temperatures in 45 years. Droughts also pervaded in the Horn of Africa where Somalia, Kenya and southern Ethiopia endured the region’s worst drought; while over in Spain, reservoirs fell below 50% capacity forcing northeast regions to undergo water restrictions.

Crops were also hit by droughts. Argentina’s farmers braced themselves for estimated losses of around US$14bn as corn, wheat & soy output were expected to be slashed by 50mn tonnes in the 2022/2023 harvest. The poor harvest of soybean meant that Argentina lost its slot as the top exporter of processed soy oil and meal in 2023.

Over in Italy, as drought loomed for a second year, a EUR7.8bn package to tackle drought was put together for 2023; its agricultural sector had already lost ~EUR6bn to droughts in 2022. Again, such news of crop failure flew under the radar, yet it was many times Ukraine grain sector losses which reached a high of US$3.2bn in 2023 due to war.

And it wasn’t just Ansar Allah/Houthi’s disrupting global maritime trade at the Suez Canal … the Panama Canal which sees through US$270bn a year in global trade was also disrupted … but by a drought. A “worst drought in over 70 years” forced a cut back of daily transit slots – typically at 38 ships per day, they fell 33% to 24 a day in November and then further to 22 transits per day in December 2023 – more on this in “War & Climate Change: Suez & Panama Canals’ Trade At Risk”.

And then there was fire & floods … we wish this never happened but entire towns were also wiped out as the infrastructure as well as their emergency responses were sadly “not futureproof enough”. Maui’s wildfires burned down the entire historic town of Lahaina and killed 100 residents; whereas over in Libya, the catastrophic failures of two dams following Storm Daniel caused floods that inundated and destroyed a quarter of the city of Derna. At least 4,000 residents are confirmed dead with further 10,000 missing in Derna.

 We were pleased to see “Rabbit holes” worry financial regulators enough to step up disclosure & stress tests…

…Disclosure was also on the rise — ISSB standards mandated in HK & SG in 2025

Like we said, we are late … in fact, most adaptation measures in place today will not be able to withstand escalating risk, which is worrying as climate breakdown can also trigger financial shocks. Here, we were pleased to see “Rabbit holes” worry financial regulators enough to step up disclosure & stress tests. As flagged by our 2022 APAC Banks report, we feared that they were not stress testing at the IPCC’s “cannot be ruled out” levels for sea level rise (SLR).

So in 2023, we were pleased to see the Asia Investors Group on Climate Change (AIGCC), with US$32 trillion AUM agree with us. Together, we wrote a AIGCC-CWR open letter to APAC banks, urging them to overhaul their climate stress tests for escalating coastal threats. Although S&P covered this when our report came out, it has since been picked up by regulatory focused media such as Regulation Asia as well as The FT’s Specialist dedicated resource “Banking Risk and Regulation”. There was also support from the NGFS (115+ central banks and regulators) which updated its climate scenarios in November 2023.

Disclosure is also on the rise. ISSB standards, which will be mandatory in Hong Kong and Singapore in 2025, were put in place – see our interview with the CEO of Hong Kong’s Securities & Futures Commission last year. We also saw in 2023, the final version of SBTN’s “Technical Guidance for Freshwater” to help set science-based targets for freshwater and CDP released “Shaping High-Quality Mandatory Disclosure – Taking Stock and emerging Best Practice” to support the shift of financial flows towards achieving climate goals.

Here, we are pleased that we were invited to participate in the development of both global frameworks. CWR was one of the ~40 members advising on SBTN’s freshwater framework and sat on the steering committee to shape high quality disclosure for CDP.

China & India “pulled rabbits out of hats” to come out tops in renewables expansion…

…But good efforts were juxtaposed by all-time high oil productions

We also said that the Global South & corporates will ramp up action in 2023. Indeed, we saw China and India “pull rabbits out of hats” to come out tops in global renewables expansion race – see infographic. And we were pleased to see corporates “gathering a rising tide” on building financial resilience from rising seas – in case you missed this – check out 8 positive actions last year.

Rabbits are crafty and while we did “breed innovations like Rabbits!” and “schemed for good” we also “got caught in a lie”. ‘Good schemes’ like 120+ countries agreeing to triple global renewables by 2030, were juxtaposed by countries like the US reaching an all-time high in oil production last November. Steps forward on stress testing were negated by big oil back pedalling on climate targets. Greening was also marred by greenwashing with brands being called out for greenwashing.

We too wanted to ‘walk the talk’ on breeding innovation so wrote a report on carbon & the ICT sector…

…which could = 23% of global GHG emissions by 2030, so why isn’t it a priority sector for transition?

As we too wanted to ‘walk the talk’ on breeding innovation, we hopped away from water and wrote an entire report on carbon! The report  “China ICT transition: The good, bad & ugly of 5 HKEX ICT listco’s net zero pledges & climate action” highlighted tremendous opportunities in carbon cuts from just 5 ICT listcos equivalent to 2.5x HKSAR’s GHG emissions as well as billions of dollars of green finance.

We felt compelled to highlight the opportunity to net zero over a fifth of the Hang Seng Index as the rise of AI/5G/Chatbots will increase the power usage of the ICT sector. Shockingly, the sector’s share of GHG emissions could increase from 2-4% today to 23% by 2030. Now, that kind of expansion would certainly accelerate climate breakdown so why isn’t ICT a priority sector for transition?

Thankfully, our ICT report has already kicked up a storm of interest and discussions that will carry forward into 2024 and the Year of the Dragon …

Enter the Dragon …

Power, honour, benevolence, prosperity and good fortune are traits that embody the Dragon, which is why Dragon babies have been popular for centuries. In 2024, we’ve entered the year of the “Wood Dragon” which is supposed to “foster growth, progress and abundance” … all much needed after the year we’ve had.

But to tap into the Wood Dragon’s “vitality and creativity” to unleash success, we must look beyond … into the heart/essence of the Dragon.

In Chinese legend, Dragons are the rulers of weather and water, such as rainfall, waterfalls, rivers, and seas; and they lived in the water themselves. The Dragon’s connection to water goes back to the Great Race which the Dragon was expected to win but instead placed 5th. When the Emperor asked why it did not win, the Dragon said it was held up because it needed to make rain for a village along the race that was suffering a great drought.

The Dragon understands how vital and valuable water is and more importantly, it has mastered the control of it. So with escalating water & climate risks as global warming accelerates, it is critical that we too channel the Dragon and put water at the heart our agenda – to understand the complex web of water risks so that we too can learn to control it. After all, water is life – it is the only resource we cannot live without.

As we stand at the head of the Year of the Dragon, at the precipice of the climate breakdown, we have been offered a chance to “save our planet” by “saving water”…

…we must channel the Dragon and put water at the heart of the agenda

So as we stand at the head of the Year of the Dragon, at the precipice of the climate breakdown, we have been offered a chance to “save our planet” by “saving water”. The Wood Dragon is full of possibilities and opportunities… leverage it wisely.

But to ride this dragon’s wave of success, we must first avoid the storms and fight droughts. The increasingly hostile and ‘scorching’ waterscape means that the chances of going down in flames are high. Like in Game of Thrones, where there is fire, dangers also lurk in ice – and in 2024, there’s a very real chance of waking the dreaded Ice Dragon which will literally reshape our continents.

So against this increasingly deadly climate battleground of fire & ice, up your odds for favourable winds of success …avoid the pits of hell, soar high and reap rewards in the Year of the Dragon with our 5 trends:

1. Where there’s a Dragon there’s fire! Scorched earth forces us to up adaptation efforts…

It’s official, 7 consecutive monthly temperature records were broken last year making 2023 the hottest year on record – global warming stood at 1.45°C above pre-industrial levels for the year. We are so very close to the Paris Agreement target of 1.5°C, yet with El Niño, 2024 is likely to be even hotter

At this point, it’s worth noting that warming only stood at 1.15°C above pre-industrial levels at the end of 2022 – we are not inching but soaring towards scorched earth.

In our conversation with Dr. Stefan Uhlenbrook, the WMO’s Director of Hydrology, Water & Cryosphere, he told us that “we are very much on track to pass 1.5°C and now we must hope to stay below 2°C.” Ironically, in that very same month, this hope was dashed as warming soared to a high 2.06°C. It is as he feared: “I think we are on the way to 2°C plus”.

Broken records will be the new norm in 2024 and rising temperatures will continue to wreak havoc

Broken records will be the new norm in 2024. Rising temperatures will continue to wreak havoc – our water, food & energy systems, critical infrastructure as well as our health will all be impacted. Unfortunately, also on the cards are more crop failures, droughts, floods as well as a growing number of named storms unless we step up adaptation.

We are massively underprepared and extremely vulnerable – 2023 has shown us that. But 2024 will drive it home: the Dragon in its many water forms – rain, sea and ice – will be unleashed but in new majestic proportions. We will feel it’s watery and scorching wrath in this year sparking a rush to adapt for rising risks. “Doomsday prepping” will enter mainstream dinner conversation – is my home safe? Where shall I move? Will my insurance cover losses? How ready am I for big floods/typhoons/fires? What are my evacuation routes?

“Doomsday prepping” will enter mainstream dinner conversation…

…but can also expect this at C-Suite & G2G levels across Asia on adaptation too

But don’t maladapt! To truly survive the onslaught of climate hazards to come, we will need massive transformation of our cities, agriculture, industries, power systems, society and habits. Small changes won’t cut it as the Wood Dragon demands a rethink and transformations on a GRAND scale … and of course because it is the dragon, through a water lens.

So in 2024, we expect to see more action and conversations not just at the dinner table but at C-Suite and G2G levels across Asia on adaptation. We also expect Asia to also leapfrog ahead with innovative resilient infrastructure, with much more knowledge sharing and showcasing of successful measures on how to develop with smaller water and carbon footprints.

“Controlling water” is also one of the dragon’s talents and for 2024 we also expect to see more countries “wake up” and respond to source-to-sea risks along key arterial rivers which are the lifeblood of farming and industry from the Rhine & Po to the Yangtze & Ganges. Countries will move toward a holistic waternomic management of water resources from source-to-see. “Dragon Kingdom” China in particular, will move fast on this front – more on this in Trend #5.

More worryingly, with rising temperatures we are also locking in irreversible sea level rise (SLR). Here, as we make plans to adapt for an increasingly hostile climate, we will have to be vigilant as waking up the “sleeping ice dragon” will bring about multi-metre SLR with a biblical level of devastation – the odds are high enough for us to devote an entire trend on ice – see Trend #3.

Transformative adaptation needs lots of money…

…US$700mn pledged in the Loss & Damage fund, but much more is needed

Transformative adaptation needs lots of money. So 2024 will see more funding going towards speeding up adaptation as well. The Loss and Damage fund (US$700mn pledged) set-up at COP28 set the tone but much more will be needed to futureproof against climate risks.

One such sector which will receive a ton of funds is the power sector. It won’t be just for transition (more on this in Trend #4) but also for adaptation. Remember, just 12 storms knocked out power to 4 million people last year. Let’s also not forget that many fires were ignited by a combo of winds, dry vegetation and transmission sparks from old power lines.

But tackling power can bring both water and carbon savings as well. Coal-fired power contributes and is vulnerable to water scarcity as it requires water to generate. Our analysis of 1.9TW installed capacity across 16 countries in Asia found that escalating climate risks and rivers running dry can strand sizeable portions of national power generation assets from China, India to Pakistan.

94% of the 865GW in the 10 basins needs water to generate electricity…

…time to rethink energy security through water security

Given that over 94% of the 865GW located in the 10 river basins analysed needs water to generate electricity, we see the Year of the Dragon as an opportune time to rethink energy security through water security and expect to see countries start to factor this in as well.

But remember, it’s not just poorer countries that are experiencing infrastructure failure – UK’s sewage crisis case in point as 2023 saw more than 400,000 untreated sewage dumps. This problem will clearly worsen until it’s fixed and fixing this could cost up to GBP660bn, which the UK government says it does not have.

Here, a quote from Bruce Lee’s Enter the Dragon seems appropriate: “Don’t Think, Feel! It Is Like A Finger Pointing Away To The Moon. Don’t Concentrate On The Finger Or You Will Miss All That Heavenly Glory.” Water is crucial, ensuring its flow ensures our future survival and good fortune – the dragon is here to remind you that “fixing water” must always be our priority.

Another reason we must prioritise water is fire which will continue to rage … it is the Year of the Dragon after all. Fires must be dampened as they trigger a vicious cycle, not only do they result in carbon emissions but also wipe out forest carbon sinks – last year more than 480 million tonnes of carbon emissions were released when 18.5 million hectares were on fire in Canada – this is more than the land area of Cambodia.

Another reason we must prioritise water is fire which will continue to rage…

…there are zombie fires in Canada

The scale of Canada’s fires were staggering: 480mn tonnes of emissions were released, almost 5x the average for Canada in the past 20 years or more than the combined GHG emissions of the UK and HK. And that was just Canada … fires also raged in Australia, Hawaii, Greece, Spain and Turkey. Clearly adding emissions of another UK and HK every year will only send us zooming faster to a fiery hell.

Worst still, some of these fires have not stopped. Did you know there are also “zombie fires” burning in Canada? The BBC says these fires are still burning under thick layers of snow at an unprecedented rate. Peat moss is still burning even when it’s bitter cold at -40C.

The Dragon forces us to face the stark reality of a brave new world – scorched earth is already here – old ways of doing things won’t work anymore. It’ll be baptism by fire: there is no doubt we will be hit, it’s about how fast you get up; and how fast you get up depends on how much resilient you are. Hong Kong was back up and running the next day after black rains of 158mm per hour. While Hong Kong is resilient for now, it must prep for a watery future as new academic studies show that the SAR is in for 230mm per hour of extreme rain in the 2040s; and that’s under an intermediate GHG emissions scenario of SSP2-4.5!

The Dragon forces us to face the stark reality of a brave new world – scorched earth is already here

The widening of extremes is frightening. This means the only way forward is to think BIG – those that will thrive are those who have the vision and courage to transform. So let the Dragon’s courage, control of water and strength guide you – it is an auspicious year for change!

Be prepared, as for how prepared, it depends on how you view the next 2 trends …

2. Tiger & Dragon fighting! Stress test & plan for SSP3 base case & SSP5 worst case scenarios

The reason why we are dealing with a “scorched earth” is because we are now tracking the IPCC’s high and very high emissions scenarios of SSP3-7.0 “Regional Rivalry Scenario – A Rocky Road” (SSP3) and SSP5-8.5 “Fossil-fueled Development – Taking the Highway” (SSP5). These two scenarios predict that emissions will roughly double from current levels by 2100 and 2050, respectively and the best estimate for temperatures by 2081-2100 will be 3.6°C and 4.4°C.

With wars escalating & continuing tense geopolitics between the Tiger (the US) & the Dragon (China), we are arguably tracking SSP3

With wars escalating and continuing tense geopolitics between the Tiger (the US) and the Dragon (China), we are arguably tracking SSP3 – its narrative aptly describes the global situation today:

“A resurgent nationalism, concerns about competitiveness and security, and regional conflicts push countries to increasingly focus on domestic or, at most, regional issues. Policies shift over time to become increasingly oriented toward national and regional security issues. Countries focus on achieving energy and food security goals within their own regions at the expense of broader-based development.”

For example, while the G7 calls for a reduction in coal in Asia to reduce emissions, they themselves are investing in fossil fuels  – according to analysis by Oil Change International, between 2020 and 2022 the G7 provided US$78bn in public finance for fossil fuel projects which was 2.6x their support for clean energy.

Plus, more recent data shows that just 5 countries are responsible for 51% of planned global oil and gas expansion through 2050 – they are the US, Canada, Australia, Norway, and the UK. Notably, the US as the “Planet Wrecker In Chief” is responsible for more than one third of this despite Biden’s Climate Bill (Inflation Reduction Act).

As the Dragon is all about honesty, let’s call a spade a spade. The G7 which is supposed to lead us out of this hot climate mess is squarely “taking the highway” in fossil fuel development. This highlights the difference between rhetoric and action and is true hypocrisy given these countries are calling for zero coal in Asia. Oh, despite zombie fires ravaging their lands, Canada is forecasted to lead world oil production growth this year. Go figure.

If the global military were a country, it will be 4th in terms of its annual emissions, between India & Russia

The added carbon cost from wars is not going to help either – according to The Conflict and Environment Observatory militaries are responsible for 5.5% of annual GHG emissions; if the global military were a country, this would put it 4th in terms of its annual emissions, between India and Russia!

Each war adds more emissions – for example the war between Russia and Ukraine could have already caused 150MtCO2e, which is over 4x Hong Kong’s annual emissions. Over in the Middle East, the Guardian revealed that the first two months of the Gaza war alone produced emissions that were greater than the carbon footprint of more than 20 of the world’s most climate-vulnerable nations; it’s now the 6^th month. Nothing is fair.

And then there is the wider escalation in the Middle East with Ansar Allah which has blocked the Suez Canal causing ships to be rerouted increasing travel time, costs and emissions.

Given that there is no end in sight to both the Ukraine and Gaza wars, surely SSP3 should be the new base case scenario.

But given fossil fuel explosion, could SSP5 be the base case? Is the doubling of emissions in 35 years between 2015-2050 realistic? Maybe not, as emissions increased by 51%: from 37.9GTCO2e in 1990 to 57.4GTCO2e in 2023.

But given fossil fuel explosion, could SSP5 be the base case?…

…we’ve hit CO2 levels off the chart in human existence; we should be terrified…

…expect more on stress testing from companies to central banks

Another way of looking at this is the growth in CO2 levels – in May 2023, we hit a high of 424ppm which “is completely off the charts of human existence, going back 3 million years”.  Yet worse still, it was up 3ppm from the May 2022 average. An increase of 3ppm in a year does not sound like a lot, but together with permafrost emissions puts us squarely in line with “4-5°C of warming by 2100 and rising”.

In short, the growth in our CO2 levels is tracking SSP5. We should be terrified: according to the State of the Cryosphere 2023 report, “we are currently on track for even higher temperature peaks than those that drove … past sea level rises” that peaked at around 12–20m higher than present-day levels – for more on why this isn’t a far stretch, see Trend 3.

Depressed? You should be. But eyes wide open to death and destruction before us will also “breathe fire” into more action so expect the following:

• Companies being more transparent and disclosing their physical stress test results. Better stress testing is needed to really see the future risks which could in turn give more incentive to reduce emissions. After all, seeing is believing – start by reading Trend 3. We have seen that companies armed with their stress testing results start to disclose more on the risks and their action.
• Companies are also leading the government engagement charge post stress test: Corporates are also taking up the mantle to engage governments on their adaptation plans even for the “cannot be ruled out” scenarios. This is very important as the “sleeping dragons of ice awaken” sooner than you think and cause havoc globally – we must have contingency plans in place for this likely eventuality given the current global hypocrisy on carbon emissions.
• Central banks piloting stress tests incorporating “cannot be ruled out” scenarios: So far central banks have shied away from calling for stress tests that include these scenarios but given escalating emissions and climate impacts we think central banks will start piloting this as they will need to fully understand what these risks will entail for financial stability in the long term.
• The Global South will unite to adapt: many of these countries may not have caused climate change but will bear the brunt of its impacts. Given the hypocrisy of the Global North with continued emissions, we expect to see the Global South unite to adapt for future impacts through data and tech sharing.

While physical risk stress testing & adaptation efforts will be sped up, there will also be more focus on GHG disclosure. This will be at a national level with the updated NDCs in 2025 as well as at a business/ operational levels with corporates. Finance will also start linking performance and capital access more closely to transition, aligning with the rise of ‘transition finance.

Have to avoid SSP3 & SSP5 as we don’t know actual outcomes…

…plus we have a history of under-estimating impacts

There’s a Chinese saying: 龙虎相斗，鱼虾遭殃 “when dragon and tiger fight, fish and shrimp suffer”. Indeed, we will all suffering if the fighting continues. It is imperative to take action to avoid SSP3 and SSP5 as we don’t know the actual outcomes; plus, we have a history of under-estimating impacts.

To say that the challenges before us are grand is an understatement. But the good news is that dragons are not afraid of challenges, and are willing to take risks. They dare to break away from traditional norms and pave the way for a brighter future.

This isn’t going to be easy but as Daenerys Targaryen said, no one knows how to ride a dragon “until they ride a dragon”. So with no time to waste, don’t run around like Chicken Little and bemoan that the sky is falling down, get on your Dragon and ROAR … get on with it and prepare for the worst for only the paranoid will survive this ‘song of fire & ice.’

3. Ice kingdom cracks & the mighty ice dragon awakes to unleash unimaginable havoc

Many of us forget that 70% of the Earth’s freshwater resources are sealed in ice, akin to a colossal dormant Ice Dragon. However, as the oceans continue to warm, this mighty beast is stirring from its slumber and becoming so irritated it could unleash unimaginable levels of SLR.

 Cracks in the ice kingdom are showing…

…brace yourself for sooner than expected SLR

Fuelled by a scorching Earth and the effects of El Niño, cracks in the ice kingdom are showing. In the Year of the Dragon, the power of the Ice Dragon will become increasingly apparent – the resounding roar of ice melting from the polar regions will only grow louder, capturing the attention of the world. So, in the upcoming year, brace yourself for more significant changes in the ice/ cryosphere.

From mountain glaciers to sea ice and ice sheets to permafrost – they’re all in the firing line. Their melt/thaw is happening too fast & too soon  which means seas will also rise sooner than expected; worse still, abrupt jumps in SLR may also be on the cards.

We have been talking with ice scientists; they all share a pessimistic outlook. They are downright shocked at how quickly the ice is melting.

Many used to think that as long as we kept global temperature warming below 2°C, the ice would be “safe”. But guess what? That’s not the case anymore. Turns out, even reaching 1.5°C will put ice in a danger zone, and 2°C is definitely too hot for ice.

Jan 2024 pushed us to 1.52°C for the rolling 12-month period…

…we are now firmly in the danger zone for ice

Although we finished 2023 with 1.45°C warming, an abnormally hot January, pushed us to 1.52°C for the rolling 12-month period. We are now firmly in the danger zone for ice. Even before this, as bad news on ice melt leaked from both the Arctic and Antarctica, even mainstream news carried headlines about fast rising seas in 2023:

In the dragon’s shadow, polar ice melt will finally get the attention it deserves as there’s more bad news in 2024 from both the Arctic and Antarctica. With vulnerable coastlines across Asia, we can no longer turn a blind eye to the wrath of this “Ice Dragon” when it wakes.

Polar ice melt will finally get the attention it deserves….

…building on One Polar Summit, convos in HK incl. IPCC’s ‘cannot be ruled out’ SLR scenario

Already, France hosted “The One Planet – Polar Summit” in November 2023 to raised the alarm about the scale and speed of melting ice and permafrost thaw. Representation from Asia was sorely missing but hopefully, in 2024, it will gather momentum and with “dragon luck”, more governments, scientists, corporates & financial institutions will join the call to address the enormity of imminent multi-metre SLR. The

In Hong Kong this January, we were thrilled to see the start of a long overdue conversation on adaptation between the government, REDA (Real Estate Developers Association of HK) & HKFI (The HK Federation of Insurers). IPCC’s “cannot be ruled out” 2-3m of SLR by 2100 were tabled giving us hope that the HKSAR will address the business & financial communities’ increasing concerns over rapid ice sheet melt and their SLR impact on Hong Kong where valuable real estate and critical infrastructure is clustered in low-lying reclaimed land (see impacts here).

Important to note that once awakened, it will take an Ice Age to return this ice beast to slumber

It’s important to remember here that once awakened, it will take an Ice Age to return this ice beast to slumber. SLR is irreversible even if we stopped emitting right now; the fact that we are heading down the SSP3/SSP5 pathways equate to dire destruction for all coastal populations & cities.

Yes, it’s scary but don’t run away, it’s time to be brave & battle the Ice Dragon.

But to win, we must understand the current lay of the land in the ice kingdom and when we stress test to see what’s at stake, you too will get your dragon on …

2024 will be an “aha” moment for everyone to realise that these ice-related impacts are not “out of sight and out of mind” but coming to a neighbourhood near you.

The only way to stop any further disturbances to ice and avoid the full awaking of this grumpy dragon is to fast-track decarbonisation. We must strive to adapt as per Trend 1 and avoid the scenarios laid out in Trend 2. Plus, we must go all-in on finding solutions like discussed in Trends 4 and 5.

On current path AMOC will collapse ~mid-century & ~15mn people now at risk from glacial lake outbursts

Only by taking decisive action to address the root cause of cryosphere changes i.e. GHG emissions, will we have a chance at preventing the catastrophic consequences of the ice dragon’s flying amok … literally. On the current path the Atlantic Meridional Overturning Circulation (AMOC) is also slated to collapse around mid century! Again, previously unimaginable, this will further change weather as we know it much sooner than we thought; we didn’t think AMOC collapse would happen before 2100.

And we haven’t even talked about the additional 15 million people now at risk from glacial lake outbursts or the biblical consequences of our mighty rivers running dry as our Himalayan water towers melt – one in two Asians live in these 10 river basins.

There are only so many fronts we can hold…

…best not to open it … let sleeping dragons lie

There are only so many fronts we can hold; while we are dealing with scorched earth, it’s wise to keep the ice dragon sleeping. Otherwise, even if we were to master the legendary martial arts like the “Eighteen palm attacks to defeat dragons（降龍十八掌）“ we would still be unable to tame the beast. Once this Pandora’s Box is opened, there is no “undo button” … so it’s best not to open it … let sleeping dragons lie.

4. Soar to new heights & take a flight through innovation!

It’s pretty clear we’re not where we need to be with climate action. But don’t worry, in 2024, there’s a silver lining. Like we said before, dragons are a symbol of transformative energy and so 2024 will not just be another year, but one which holds massive potential for groundbreaking changes. As Hong Kong soothsayers are saying “Dragon’s arrival in 2024 heralds rare era of transformation, innovation and drastic change.” 

Drastic change on transition is exactly what we need and we generally are at our most imaginative when our backs are against the wall.

Passing tipping points, usually a scary notion (like the collapse of major ice sheets or coral reefs) but they can be catalysts for change. Think renewable energy, EVs, plant-based diets and more. We just need to intervene in our systems – technology, economic, political and social – to enable positive tipping points to be triggered. See Norway’s rapid tipping of the EV market across all sectors.

Drastic change on transition is exactly what we need…

…like triggering positive climate tipping points

Other good news is that renewables are on track, having achieved the annual growth rate of 17% that’s needed to triple renewable energy capacity by 2030. Even the automotive industry is greening, catching the dragon’s tailwinds with EV sales capturing over two-thirds of the market by 2030 well on the way to the target of 75-95% required to achieve 1.5°C.

The rise of big data and AI has also helped save energy. AI, for example, beyond facilitating ESG analysis & rating and so on can slash emissions by up to 10% by 2030, with cloud solutions potentially expediting ~50% of the decarbonisation efforts needed for the 2050 1.5°C goal. That’s pretty impressive.

AI & cloud solutions can slash emissions & expedite decarb efforts…

…but ICT isn’t exactly clean — emissions could go up to 23% if data centre expansion is not green

But the ICT sector isn’t exactly clean, accounting for 2-4% of global GHG emissions; and if data centre expansion is not green, emissions could balloon to whopping 23%! Why? Because the ICT market is booming big time — especially AI, which is set to reach $15.7trn globally by 2030 – adding generative AI to Google’s search consumes 5x more energy per search.

ChatGPT is also projected to rake in $1bn this year alone – this will also suck up more power plus, it will be bad news for water … because if say 100 million ChatGPT users had one conversation, they would consume 20 Olympic-sized swimming pools. Given this staggering amount, the ICT sector will no doubt face water risks ahead … so sign up for our newsletter & watch out for our 2024 report on this!

ChatGPT projected to rake in $1bn this year but bad news for water…

…100mn users having 1 conversation = 20 Olympic pools

The Year of the Dragon will provide tailwinds for transition but as dragons are also rulers of water, it pays to think holistically. Water, often overshadowed, will demand more attention across sectors –think about it: there’s AI’s water-cooled data centers, the fashion industry’s water intensive & polluting dyeing processes, semiconductors need for Ultra Pure Water and let’s not forget that mining for all materials need for transition from lithium, nickel, copper to rare earths also need water and can be highly polluting.

Here, we see fashion in midst of a makeover. The market for sustainable fabrics is forecast to grow at a CAGR of 12.50%, driven by increasing consumer demand for ethically produced and environmentally friendly clothing. It’s about time dirty & thirsty fashion is rethinking its fast consumer goods model.

Expect to see worries over water risks rise as brands move to waterproof supply chains & investors their portfolios

This move is not surprising as with accelerated warming, we expect to see worries over water risks rise not just for fashion, but across sectors as brands move to waterproof their supply chains and investors/bankers their portfolios. But while doing so, beware … the honourable and honest Dragon demands that we must not trade one environmental problem for another and that our innovative strides towards sustainability do not inadvertently harm the planet we aim to protect.

The Dragon will also catch us out on lies so don’t greenwash with net zero products like Apple or greenhush like 70% of listed companies which deliberately under-reported their ESG initiatives according to the South Pole’s net-zero 2023/2024 report that surveyed 1,400 businesses across 12 countries and 14 sectors.

The survey also found that that the highest proportion of companies greenhushing came from the green sectors with close to 90% admitting to greenhushing; even more than those working in oil and gas. They cited investor pressure as the main reason.

But don’t lie about what you’re doing or not – greenwashing cases & greenhushing are on the rise…

…with news laws, now is not the time for backsliding on green targets

Also, several governments including that of the UK and even more companies/ sectors (like oil) and financial institutions are backsliding on their green targets and pledges.

Now is absolutely not the time for this especially when laws are also put into place. In July 2023 Singapore proposed mandatory climate reporting aligned with the recently published ISSB Disclosure Standards for both public and private companies. And then in December 2023, the Monetary authority of Singapore launched the Singapore-Asia Taxonomy for Sustainable Finance. Meanwhile, in Europe the European Sustainability Reporting Standards (ESRS) were published now mandating sustainability reporting that will start from 2024 for large companies and then be mandated for medium-sized businesses in phases through 2026.

We also see the oil sector up for a makeover – backsliding on targets is no longer acceptable.  With the dragon’s fiery breath scorching our lands, cutting down oil and fossil fuels isn’t just preferable; it’s critical – this wild dragon that’s been threatening our global village must be tamed. We are cautiously optimistic: WBD’s 2024 Energy Transition Outlook Survey shows promise — more than half (56%) of respondents increased their investment or operational focus on energy transition strategies over the past year.

Plus there’s a rush into carbon capture, which bodes well as it needs massive scaling up.

At our current rate we will only remove ~2bn tonnes of carbon by 2050, which is a removal that’s in line with the 2.5°C scenario — not exactly the goal we’re aiming for.

It’s clear carbon capture needs to scale up but, again, the process can be water intensive so have water in mind when selecting the type of carbon capture tech to use.

The journey ahead is fraught with peril, but with careful planning and a united front, we can avoid waking up the Ice Dragon and soar high towards a more liveable future. It’s possible … enter the Dragon …

5. It’s possible! The Middle Kingdom channels the dragon …

China, often symbolized by the dragon, recognises the critical importance of holistic water management in its pursuit of sustainable development. Drawing inspiration from the dragon, the ruler of water, China has embarked on a transformative journey to establish a coordinated and efficient system for water governance, ensuring that its “dragons” move in unison towards a common goal.

China’s water governance transformation to a mountain-to-oceans approach started more than a decade ago…

This transformation did not start now but more than a decade ago. Back in the last Year of the Dragon back in 2012 we were already seeing water everywhere in China’s policies – see our 5 trends then!  China, well aware of its water constraints, then plotted a sure footed path towards water security with 8 game changing policy paths including the new “Water 10” (China’s Water Pollution Prevention & Contral Action Plan).

To truly deliver these plus more for the march towards an ecological civilisation, China also underwent significant ministerial reform, transitioning from the decentralized “Nine Dragon” system (九龙治水) to a more centralized approach known as “Two.”

This shift, akin to a group of dragons with a unified leader (as opposed to 群龙无首, a group of dragons without leaders), demonstrates China’s determination to address its monumental water challenges.

Notably, significant progress has been made since the implementation of the Water Ten. This stringent and comprehensive policy, like the dragon’s mighty roar, has reverberated across the nation, guiding efforts to clean, protect and conserve water. China has come a long way since then … how far you ask? Well, we are doing a “stock take” of this with IPE so expect more to come on this front.

…significant progress been made since implementation of Water Ten

Looking ahead, China will introduce stringent regulations to support a holistic waternomic approach to protect watersheds from the mountain-to-the-ocean, building upon its first ever 14FYP Water Security.

Yes, China now has a 5-year plan dedicated to water security, signalling that water is a top priority for the next 100 years of development.

This Water 14FYP recognises the many & significant challenges China faces with water (spatial distribution, economy ++) and there’s strong recognition of managing water from mountains-to-oceans plus strong fortifying of flood measures for 1 in 100-200 years storms. In a way, you could look at this as a grand transformative adaptation plan.

China now has a 5-year plan dedicated to water security, the Water 14FYP ….

…can look at it like a great transformative adaptation plan

Also, five national parks that are home to nearly 30% of key terrestrial wildlife species have been established; one of these is Sanjiangyuan, the source region of 3 key rivers – the Yangtze, Yellow and Mekong. We expect more of these to be established in the future, as China aims to establish the world’s largest national park system. Chinese scientists are even taking steps trying to help stop Sichuan’s glaciers from melting by utilising Hi-tech radiative blankets to reflect heat.

Meanwhile, further downstream China is leveraging AI & 5G to enhance water management, disaster prevention, and digital watershed initiatives. “Digital twins” (virtual simulations of real-world processes) are increasingly being adopted in major river basins, improving flood control, disaster warning systems, and overall water security. Hopefully, these digital twins also enable more accurate predictions of future climate scenarios.

In short, China, like the dragon, views water & nature as the backbone of its prosperity and remains committed to protect its major rivers, notably the Yangtze and Yellow “Mother Rivers”. These 2 giant dragons snaking across China hold significant cultural & economic importance and are often mentioned in President Xi Jinping’s New Year addresses … in 2024, he said “The mighty Yellow River and Yangtze River never fail to inspire us” and that the “Yangtze River Economic Belt is full of vitality”.

So take inspiration in the Year of the Dragon and look to China for ideas and innovations to safeguard rivers so that they can continue to ensure “vitality and prosperity”.

Besides water, China will also move to ensure it hits its dual carbon goals…

…in solar & wind, China achieved 230GW of new capacity, surpassing US & Europe combined + aims to double its RE by 2027

Besides water, China will also move to ensure it hits its dual carbon goals. In the Year of the Dragon, expect less coal-fire as China is taking ambitious strides to reduce its reliance on fossil fuels. Currently, already at the forefront of wind and solar expansion, with an expected 230GW of new capacity in 2023, surpassing the combined efforts of the US and Europe, the nation aims to double its renewable energy capacity by 2027.

EV penetration is also on the rise, further contributing to the country’s clean energy goals as is green hydrogen another promising avenue for advancing China’s energy transition as per our conversation with Bluerisk Director.

China’s ICT sector is also going green. Marked as a “dual high” sector, ICT faces regulatory push to transition from a government procurement scheme stipulating renewable energy consumption in data centres to be 100% by 2032. Why? Because if data centres don’t decarbonise, their emissions could balloon to 340MTCO2e by 2030; this is similar to the UK’s annual energy-related emissions. Green energy procurement, efficiency retrofitting, green financing, and carbon market opportunities are abound within the ICT sector – grab them!

China is also cleaning up its ICT sector & powering ahead with green finance

China is also powering ahead with green and inclusive finance, which encompasses all of the above actions, policies and plans. Transition finance – like that needed for the ICT sector – is also set for rapid growth – for more see SynTao Green Finance and China SIF’s 2024 Top 10 Trends in Responsible Investment in China. Syntao also expects development ideas such as ecological civilisation, rural revitalisation, common prosperity and high-quality development to create a favourable external environment for ESG development in China.

Just like the dragon symbolizes strength and wisdom, and adapting to its changing environment, China is poised to embrace transformative adaptation and prepare for “just-in-case” scenarios to effectively tackle challenges like droughts and floods. We see them doing this for critical infrastructure like the power sector and also for ports.

China is embracing transformative adaptation & preparing for “just-in-case” scenarios…

…e.g. Tianjin Port is world’s first zero carbon emissions terminal

For instance, Tianjin Port now touts the world’s first zero carbon emissions terminal with a loading capacity of 200,000 metric tons. Powered by wind and solar energy, the terminal uses 5G & AI and self-driving vehicles to optimise loading and unloading making it 20% more efficient than other terminals. Imagine if such state-of-the-art zero carbon tech can be deployed across all ports in China and beyond.

Many developing nations already look to China as a model to help them leapfrog ahead in their sustainability journey. Since there is no time to waste, it is important to discuss and share innovations, case studies of what works and what doesn’t so that we can all power ahead.

As climate impacts are outpacing action, we expect China to steadfastly forge ahead to ramp up climate action. We also expect it to prioritize ice and rising seas, especially since we are at the “too hot” danger zone for ice of 1.5°C. It’s not going to be an easy year for the “dragon” in the Year of the Dragon but with “resolve and tenacity”  it will get there.

Be on fire but don’t go down in flames …

It pays to be decisive in 2024 but it also pays to set a longer term vision as shorter term objectives with no vision means that you will end up shooting yourself in the foot. Be on fire and seize the special creative qualities of “Wood”. Remember, this year’s Wood Dragon is a rare combination of the Dragon’s power & luck and Wood’s creativity – we can tap this to solve problems, innovate and set visionary goals.

Whether you like it or not, change will come as fire & ice dragons roil…

…keep the ice dragon in slumber, adapt with the other, or face rising seas & flames

Water is at already at critical stage, yet it will only get worse. Future pollution will cause the number of river basins at risk of water scarcity to triple according to a new Nature study in released this year. This means that 3 billion more people will face water scarcity by 2050 under the worst case scenario. Another 2024 study found that groundwater-level declines have accelerated over the past four decades in 30% of the world’s regional aquifers; falling at a rate of more than 0.5m per year.

Dare to dream and you may make it. But as there are already enough dangers looming with water, fires and ice, it’s time to make peace not war … As President Xi says … “let us all wish the world peace and tranquility!”  Only peace and a united front could move us away from the current base case regional rivalry scenario of SSP3.

Channel that dragon energy, get your brave on – we’re in the eleventh hour & soar high!

Change will come whether you like it or not as ­both fire and ice dragons are roiling. We must keep the ice dragon in slumber and adapt and change with the other, or we will be inundated by rising seas and/or go down in flames. Either way, the battle is epic and in case you haven’t realised, we are in the eleventh hour.

So channel that dragon energy and get your brave on … power up to slay emissions and leverage transformative resilience to protect your lair. Soar high! Here’s to luck, good health, much fortune and an abundance of prosperity in the Year of the Dragon!

Further readings

More on Latest

• Top 10 Trends of Responsible Investment in China 2024 — China is powering ahead with green & inclusive finance. See what this means and what else is happening in green finance with SynTao Green Finance & China SIF’s top 10 trends for 2024
• Climate ‘Tipping Points’ Can Be Positive Too – Our Report Sets Out How To Engineer A Domino Effect Of Rapid Changes — One poke too many is all it takes to pass the point of no return but what if climate tipping points were positive? Smith, Zimm & Lenton share how we can trigger these & key takeaways from their Global Tipping Points Report
• War & Climate Change: Suez & Panama Canals’ Trade At Risk — All eyes on the US & UK as they swoop in to put an end to the Ansar Allah attacks on ships in the Red Sea. But where are the efforts to battle climate change over at the Panama Canal where drought is also disrupting trade? Is war really the best strategy? CWR’s Lam shares 3 thoughts