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Consequences of Disorderly Climate Transitions

By 22/02/2023 0 Comments

Intensifying and omnipresent climate change evinces irreversible consequences. The overwhelming weight of scientific evidence manifests environmental changes and calamitous feedback loops that will push ecosystems past tipping points. At that moment, decarbonisation efforts would be rendered ineffective. The global contributions to mitigating the disorderly climate change transition still fall short. Although, governments, businesses, investors, and communities increasingly agree on the need for a faster transition as green parties and policies have gained traction in many countries, regions and industries. However, disconnects between governments regarding policy commitments, financial incentives, regulations, and immediate needs may amplify the transition’s disruptive potential within countries and have geopolitical consequences, with soaring friction between decarbonisation advocates and those who oppose strong action by employing tactics such as stalling climate action or greenwashing. Without stronger action and the slow and inadequate nature of existing commitments, the world’s capacity to counteract and adapt will dwindle, ultimately leading to varying degrees of disorder and a “too little, too late” circumstance with rapid climate change that renders the world uninhabitable. In other words, the world will pay a high price if net zero emissions are not achieved by 2050 (World Economic Forum, 2022).

Consequences of Varied Paces of Climate Transition

A quick Pace

As efforts within and between industries, businesses, and governments do not align, a hasty climate action taken now will result in discontinuities and consequent disruptions. Although it would lessen the long-term environmental effects, there could be negative short-term economic and societal impacts. Mistakes may jeopardise national energy security, trigger economic volatility and lead to abrupt energy prices, increasing societal and geopolitical tensions. Moreover, risks exist in non-holistic government measures as well. For instance, adopting low-carbon and more sustainable technologies too quickly, without considering systemic interdependencies, could result in product shortages and disrupt secondary economic cycles. Also, poor regulation of new green markets could create monopolies in competitive industries, such as extracting rare earth elements. Furthermore, a quick green transition may fail to address some blindspots that may negatively impact the environment, such as focusing only on carbon dioxide emissions and ignoring methane or extensive utilisation of resources for low-carbon technologies. 

Slow Transition

A slower but more orderly transition may be more controllable in the short term, but it will necessitate greater and faster changes in the future. This would result in more prominent long-term disorder, exacerbated by more damaging economic activity such as the closure of opportunities, negative impacts from environmental degradation affecting societal well-being, and infrastructural fragilities. Such effects would be intense on developing nations which face political and financial hindrances in quickly minimising the dependency on fossil fuel energy production, driving environmental degradation. Hence, the loss of land will increase climate refugees. This slow path may cause countries to prioritise adaptation over mitigation. However, once carbon prices rise and demand destruction renders fossil energy investment a risky bet, transitioning to renewables sooner rather than later may prove to be a more effective long-term investment for developing countries.

Disparate Paces

Differences in political will, economic structures, and capabilities will result in disorderly climate transitions by varying economies. Countries that act fast will be able to retain their national capacities and clean tech industries; those that move slowly will be less competitive in this area but will be able to utilise the innovations developed elsewhere. However, economies focusing on scope emissions will make most of the global value chains, putting laggard countries’ exports at a disadvantage. Such global heterogeneity of climate action will risk future trade flows, particularly for less-developed economies, excluding them from opportunities for orderly climate mitigation and adaptation as their access to trade finance becomes more limited. It could result in a loss of trust between countries, increased global tensions, and the imposition of sanctions against laggard nations or fines/trade tariffs on relapsed businesses.

Consequences for Stakeholders

Socio-economic Consequences for Individuals

Disorderly climate transition will have extensive socio-economic implications for individuals. For instance cost surge of fossil fuels, increasing decarbonisation requirements for homes and physical climate impacts can increase household costs. They may also face additional service disruption from utilities in cases where participants did not adequately anticipate system dependencies and discontinuities. The purchasing power of low-income households and unskilled workers who fail to transition their skillsets or those working in carbon-intensive industries will be substantially diminished. Income loss would limit people’s access to new technologies and opportunities for advancement, perpetuating inequalities for future generations and pressuring individuals to relocate to countries where their skills are still in demand.

Loss of Control by the Government

Governments will face repercussions whether climate action is slow or assertive. Steeper transition costs, such as a rapid rise in the cost of carbon and fossil fuels, may undermine public support for urgent action. Conversely, a slow motion may provoke further radicalisation from those who believe authorities at all levels are not acting quickly enough, with a possible increase in multigenerational friction and more fiscal drain due to increased recovery funding. Investing in a net zero economy could result in unsustainable debt levels for economies lacking the resources for such large-scale investment or loss of tax revenue for economies heavily reliant on carbon-intensive resource production, crippling public finances already vulnerable to economic stagnation.

Risks for the Business Community

Policies that cause large-scale industries to close prematurely would disrupt markets, impact financing mechanisms, and inhibit investment opportunities. Inconsistent policy signals, decisions that hamper competitiveness, and contrasting rhetoric, regulations, and incentives will drive dissatisfaction among businesses. Moreover, firms that lag or are implicated in slowing down climate action could impair consumer and investor confidence and face state interposition and liability risk through judicial action. Companies may also miss out on opportunities to invest in net zero technologies and future skilled professionals, affecting their long-term viability.

Nature at Risk

Some climate change mitigation measures will cost the environment. For instance, the hurtle to increase biomass use for Bioenergy with carbon capture and storage (BECCS), utilisation of more agricultural land to make biofuels for industries and extract minerals needed for decarbonisation will have acute effects on ecosystems, and indigenous societies in growing economies. Carbon-offsetting solutions, such as reforestation, could be destroyed if the land is damaged by more severe weather, such as wildfires or floods, releasing the stored carbon. Thus, prolonged deterioration of nature will place additional strain on local residents, public health, businesses, and, ultimately, societal stability. At the same time, regional population growth will have ramifications on the use of land and resources such as water and food.

The Way Forward for a More Orderly Transition

Aside from the enormity, complexity, and interdependence of the required changes, the climate transition will be disorderly because years of inaction and hesitant implementation of transformative measures at the local and global levels have led the planet down a path hard to change. Countries will need to transform at varying rates in a recovering but diverging global economy to avert short-term disruptions from negating long-term gains. Still, the repercussions of disparate transitions will be felt globally. Climate transition measures that holistically integrate the needs of individuals, societies, businesses, and the planet will be the least disruptive. Domestic and international cooperation should focus on educating the public about the importance and urgency of climate action, including changing consumer behaviour and reducing demand for carbon-intensive commodities. Businesses must be incentivised to anticipate transition risks and shift to circular economy models. At the same time, governments must be pushed to take bold and urgent steps towards implementing robust legal frameworks that guarantee a just transition. To minimise the effects of the disorder, facilitate adaptation, and maximise opportunities, all stakeholders must focus on actions that will drive an innovative, determined, and inclusive transition.


The risks associated with transitioning to a net-zero future are receiving increased attention. A chaotic transition would aggravate the risks by impairing organisations’ ability to conduct business, causing economic volatility and destabilising the financial system. However, such risks cannot be used to justify delaying the transition to net zero. The longer economies wait, the more likely a chaotic change will occur. Therefore, governments and businesses can continue to take significant steps to evaluate the risks they face and then act to drive an inventive, successful, and encompassing transition that safeguards economies and jobs.


World Economic Forum. (2022). The Global Risks Report 2022, 17th Edition. World Economic Forum. Retrieved from

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