February 25, 2021 at 5:00 am ET
Something unusual is happening.
While the world struggles to overcome COVID-19 by vaccinating all of humanity, the U.N. secretary general, Democratic members of the House Select Committee on the Climate Crisis, President Joe Biden and the CEO of BlackRock have found agreement on one thing: We can no longer ignore climate change.
There’s broad agreement among scientists that human activity is causing climate change. However, discussions often fail to make the explicit connection between climate change and man-made supply chains. Human activity is causing climate change; all human activity is driven by supply chains. We can’t solve the climate crisis until we refashion global, man-made supply chains so that they cause less harm to the environment.
Moreover, some scientists argue that the COVID-19 pandemic is one of the indirect effects of climate change, and that we may see more instances of pathogens moving from animals to people as climate change accelerates.
That is scary.
The transformation of man-made supply chains that is required if the world is to come to grips with climate change is of such scale that it requires the creation of a new, independent agency of the U.S. government. That agency should coordinate and orchestrate all U.S. activities that are required to enable this technological transformation.
We are at the beginning of the largest sector-driven investment opportunity of our lifetimes — the technology-driven refashioning of global supply chains. According to a 2016 analysis by the World Bank, $90 trillion of infrastructure investments will be required by 2030 for the world to respond adequately to climate change.
Each of the U.N.’s 17 Strategic Development Goals is fundamentally related to supply chain transformation. Each is about reducing the friction that occurs in intranational and international production and consumption networks, and ensuring that man’s use of the natural environment is symbiotic and regenerative rather than exploitative and extractive.
Information technologies will play a central role in the world’s efforts to tackle climate change directly and accomplish the 17 SDGs. However, the sort of supply chain transformation that will be required to transform the economy in the manner described by the House Select Committee on the Climate Crisis demands innovation in the way software and information, and communications technologies, interact with the physical world.
This is unchartered territory.
As the world comes to grips with the COVID-19 pandemic, we are witnessing what government support through the National Institutes of Health and Biomedical Advanced Research and Development Agency can accomplish. A process that normally takes 10 years has been shrunk to 10 months.
When the world must solve big problems, success has required active participation by the federal government. As Mariana Mazzucato puts it in her book, “The Entrepreneurial State: Debunking Public vs. Private Sector Myths:” “Indeed, nearly all the technological revolutions in the past – from the Internet to today’s green tech revolution – required a massive push by the State.” Space travel is another good example.
Transforming man-made supply chains such that the world has any hope of solving the climate crisis requires a massive push by governments around the world, but that requires leadership by the U.S. government.
There’s an attractive economic prize awaiting whoever seizes the investment opportunity presented by this urgent need to refashion global supply chains. In his speech, Antonio Guterres stated that there are $26 trillion in economic benefits to accrue from acting on climate change.
China’s “Made in China 2025” strategy is the opening salvo in what is going to be a contest between the world’s technological and economic superpowers for dominance in the global supply chain and trade networks of this century. According to “’Made in China 2025’” Industrial Policies: Issues for Congress,” “China aims to advance its national development goals and future global economic position through industrial policies that seek global civilian and military leadership in advanced and emerging technologies.” The 10 areas on which the plan focuses are all related to advancing areas of the supply chain in which China currently occupies a disadvantaged position compared to the U.S.
Moreover, “Made in China 2025” must be interpreted in conjunction with China’s Belt and Road Initiative. Taken together, and if a successor plan to “Made in China 2025” is already being developed, China is making a push to become the central player in the world’s technology-driven supply chain and trade networks this century.
That should galvanize the U.S. government and its private sector partners into creating a competing vision to capture the hearts and minds of people all over the world.
The U.S. government should create the enabling conditions, including incentives, to attract private and public innovation capital to the important task of transforming how the world generates power, grows and stores food, makes things and moves people and goods from one place to another.
On Dec. 3, Bill Gates called for the creation of a National Institutes of Energy Innovation. That’s a good start because supply chains run on energy. In the May 8 issue of Foreign Policy, Aaron Friedberg argued that “The United States Needs to Reshape Global Supply Chains.” I agree.
I propose that the Biden/Harris administration takes things a step further and create the Supply Chain Advanced Research and Development Agency, responsible for orchestrating and coordinating efforts across the private and public sector aimed at refashioning global supply chains by harnessing the cutting-edge technologies U.S. innovators have led the world in developing. This would be in keeping with the government-wide approach that Executive Order 14008 seeks to establish.
Our lives might depend on this, and our economic development this century will be more robust if we do so.
Brian Aoaeh is a cofounder of The Worldwide Supply Chain Federation, and a cofounder and general partner of REFASHIOND Ventures, a venture capital firm investing in early stage supply chain technology startups, as well as an adjunct professor of Supply Chain & Operations Management in the Department of Technology Management and Innovation at New York Universty’s Tandon School of Engineering.
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