As the world warms, Davos braces for political drama

As world leaders and CEOs made their final preparations to attend the annual meeting of the World Economic Forum in Davos, Switzerland, fires in Los Angeles sent shock waves across the financial world.

Images of America’s second-largest city aflame were a visceral reminder of the growing threats posed by climate change. Insurance companies were girding for billions of dollars in losses. Hollywood was warning of disrupted production schedules. Cities around the globe were reevaluating their vulnerabilities.

And the economic and political leaders headed to Davos were bracing for a week’s worth of discussions about how to adapt to a warming world while confronting two new realities: The world is the hottest it’s ever been, and Donald Trump will once again be president of the United States.

The heat is now inescapable. Last year was officially the warmest in recorded history. Each of the 10 hottest years on record has come in the past decade. The World Economic Forum identified extreme weather as one of the top global risks.

And Trump, too, will be unavoidable in Davos, even if he is not there in person. (He is expected to give a speech in a virtual appearance Thursday.)

“Trump is a magnetic force that does not escape Davos,” said Marc Benioff, CEO of Salesforce and a fixture of the annual gathering. “Davos will only be talking about one thing, which is Donald Trump as president of the United States and what it means for the world.”

What it means for the world remains to be seen. Even before he takes office, Trump is injecting a new level of uncertainty onto the global stage by roiling long-standing alliances and raising fears of new trade wars with his threat of steep tariffs.

Yet the implications for a second Trump administration on the climate are more straightforward.

Trump has called for a rapid expansion of fossil fuels like oil, gas and coal. He has pledged to roll back investments in clean energy that the Biden administration has prioritized. And he has said he will pull out of the Paris climate accord, an international pledge to try and limit global warming.

“It is certainly not helpful if the US backs away from the Paris process and from climate goals and from multilateral cooperation on these things,” said Jason Bordoff, founding director of the Center on Global Energy Policy at Columbia University. “That has an impact in the rest of the world’s ability to step up and increase ambition.”

The priorities of the incoming administration will inevitably shape the dialogue in Davos. Last year, climate was on the back burner at the World Economic Forum’s annual meeting. This year it will likely be the same, despite the efforts of some longtime environmental advocates.

“I’m going to be doing my best to make sure that climate is a big part of the focus,” former Vice President Al Gore said in an interview. “But many of those who attend Davos will feel torn. They’re trying to make sense of all these changes in the geopolitical environment. They’re trying to get a better grip on how fast generative AI is going to continue advancing. They’re worried about the Chinese economy. And they are looking for any clues to how they should interpret some of the hot statements that Donald Trump has been making.”

Gore said he expected Trump to unleash a flurry of executive actions on his first day in office, including many that will target environmental protections.

“The fact that that first day is also the first day of Davos will make it interesting to say to say the least,” Gore said.

Benioff was more optimistic that Trump would prove willing to work with companies and other countries to tackle environmental issues.

Five years ago in Davos, during the final year of Trump’s first term, Benioff worked with the president to concoct a plan to plant 1 trillion trees.

This year, he said, he was hoping to enlist Trump in an effort to protect the world’s oceans. Maritime temperatures around the globe have been inexplicably hot for more than a year now, bleaching corals and baffling scientists.

While humans have no easy way to dampen ocean heat, Benioff said it was also vitally important to enact new measures to reduce pollution and protect sea life.

“You have to find the issues that Trump will support,” Benioff said, adding that “fossil fuels are not the only environmental issue.”

Focusing on the need to reduce fossil emissions, he said, was a “moral hazard,” distracting from a broader range of concerns, including protecting nature and the oceans.

“I hope that oceans are something that we can get bipartisan support for,” he said.

Benioff said his efforts to work with the Biden administration on such an effort were rebuffed, and that he was holding out hope that Trump would be a willing partner.

“I tried very aggressively with the Biden administration,” Benioff said. “They failed to come in and support the oceans aggressively, and they showed very little interest in doing so. However, I have a case for optimism that Trump will support it.”

But climate change won’t be addressed with piecemeal solutions. Instead, scientists have for decades maintained that the only way to halt runaway global warming is to drastically reduce the amount of planet-warming gases humans spew into the atmosphere each year.

Most of those emissions come from the burning of fossil fuels, which still account for the vast majority of the world’s energy production. And while the overall amount of renewable electricity is rising swiftly, global emissions are not yet falling.

Instead, as overall energy demand increases, and new technologies like artificial intelligence demand even more electricity, the amount of fossil fuel production is rising as well.

How the United States responds in a moment like this matters. If the incoming Trump administration were to accelerate its efforts to produce clean energy, the rest of the world might be more inclined to follow suit. But if the United States doubles down on fossil fuels, that could set a dangerous precedent.

“US leadership is important,” said Nili Gilbert, vice chair of Carbon Direct, a company that helps corporations lower their emissions. “Other people say, ‘Well, if a country like the US isn’t doing this, why should we?’”

Some regions are more likely than others to continue efforts to ramp up solar and wind production even if the United States backs away from its climate goals.

For the last several years, during the war in Ukraine, the European Union has been trying to wean itself off Russian gas.

“I think the EU will look to stay true to its course,” Gilbert said. “This is an opportunity for them to stick to what they’ve committed and look to double down.”

Last year, wind and solar produced more electricity in Europe than fossil fuels for the first time.

China, too, shows no sign of backing away from its efforts to embrace solar energy and electric vehicles. China is both the biggest installer of solar panels and the biggest exporter of panels and parts.

Benioff said he was also optimistic that relations between Washington and Beijing would improve under Trump, despite the saber rattling, trade disputes and tensions surrounding the sovereignty of Taiwan.

“I expect a much better relationship between the United States and China,” Benioff said, adding that he believed that China would continue to pursue its climate goals.

“They are on their way to being, I think, the first country that will be truly renewable,” he said. “They’ll be a massive leader of solar and wind and the deployment of these renewable technologies, and hopefully they will shutter their coal plants.”

While China is indeed embracing solar energy, it is also the world’s largest consumer of coal, which is among the dirtiest fossil fuels.

“There’s a lot of momentum behind clean energy, and that’s great, but not nearly enough to achieve our goals,” Bordoff said. At the end of the day, it will take coordinated efforts by nations around the globe, including the United States, to truly drive down emissions.

“We need stronger government policy,” he said.

Companies are also walking back their climate goals. Two years ago, Davos was teeming with corporations touting their environmental, social and governance — or ESG — bona fides. That term became shorthand for a commitment to reducing emissions, as well as other priorities, such as diversity goals.

But over the past year, after a pressure campaign from Republicans in the United States, many companies have shied away from ESG targets.

“Trump is a part of this, but there’s a much bigger ESG reality check,” Bordoff said. Instead, he said, “everything is going to be about AI.”

Corporate leaders are giddy with enthusiasm about the prospects for artificial intelligence. In addition to increasing productivity, many say that AI may improve energy efficiency and help turbocharge the development of renewable power.

At the same time, powering the AI revolution is requiring huge amounts of new energy, much of it powered by fossil fuels. By 2028, data centers could account for as much as 12 per cent of the nation’s electricity, according to a new report backed by the US Department of Energy.

“There’s the amount of energy AI is going to need, and then there’s the use of AI as a tool in the energy sector, and these are competing forces,” Bordoff said. “But on balance, I’m optimistic that AI is going to do more good than harm to the energy transition.”

That is the sort of faith in markets that has defined Davos for decades, and it’s as true today — even with Trump and the rise of AI — as it ever was.

“Presidents change, but our values don’t change,” Benioff said. “We’re still focused on the same things. And you have to look for the opportunities based on whichever way the political world is swinging.”