The Notebook: Kokou Agbo-Bloua on humanity’s obsession with fire, the moral dilemmas raised by AI and why China’s outlook is a case of ‘heavy cloud, no rain’
Today, it’s Societe Generale’s global head of economics,cross-asset and quant research Kokou Agbo-Bloua with the Notebook pen
The Red Flower and future energy
We all remember the enchanting lyrics of the Monkey Song, ‘I wanna be like you’, from Walt Disney’s 1967 film The Jungle Book. In the movie, Mowgli is captured by a troop of monkeys and brought to a ruined city where King Louie, a large orangutan, holds court. King Louie desperately wants to be more than the king of the monkeys in the jungle. He wants to be a man like Mowgli. To realise his dream, he’s convinced that what he needs is ‘Man’s red flower’, a term jungle animals use for fire.
The ability to create fire, “the red flower”, is clearly human’s best kept secret. It’s the energy source that made us stand out from the animal kingdom and rule over planet Earth and every other species. Our use and abuse of the “red flower” is symptomatic of a chronic energy addiction. First, burning biomass and then energy dense fossil fuels allowed us to generate most of the energy needed to transform our environment over centuries, build our cities, power our economies, our transportation systems, and produce the crops and livestock needed to feed over 8bn people today.
According to the UN, fossil fuels accounts for 90 per cent of CO2 emissions. Global annual green house gas emissions have now reached a record 54bn tonnes of CO2 equivalent, and counting, with a carbon budget of only ~500 Gt before hitting the 1.5-degree celsius limit set by the 2016 Paris Climate Agreement. So we urgently need to transition from burning molecules to generating electrons as we expand the electrification of our energy systems.
Ok, this all sounds straight forward. But why can’t we simply leave the “red flower” alone? We explore all that and more in our latest podcast episode, The Red Flower.
Two futures, one podcast
Our recent special episode of ‘2050 Investors’ takes you to… well, 2050. Will we have achieved our goal of reaching net-zero emissions? And if not, what will a world on the verge of climate collapse due to human activities look like? Our attempt to look into the future, inspired by the movie Inception, sees us stuck inside a dream within a dream, where fiction and reality are intertwined, we discover a bright future where humans have taken drastic actions to mitigate climate change and protect our environment.
However, there is a parallel and alternative reality where London turns into Gotham city. It is the dystopian worst-case scenario, where our planet reels under extreme weather conditions and ecological collapse, with food and resource shortages wreaking havoc. Luckily, our AI companion, the newly upgraded SiriGPT, help us make sense of these two juxtaposed worlds. Together we navigate the future, weighing the consequences of the choices we make today to shape the world we wake up to tomorrow.
Examining AI through an ESG lens
ChatGPT and other generative AI applications are in strong demand. Companies are rushing to capitalise on large language models (LLM) to automate tasks, improve efficiency and reduce costs in the service sector. Nevertheless, automation comes with job displacement risks.
The rise of artificial intelligence is also an ethical challenge – who is accountable for AI failures? Which human jobs will be replaced? While AI seems a tempting investment opportunity, a “responsible AI framework” will have to be defined, which implies regulations and limits on use.
Heavy cloud, no rain
Over the past 18 months or so, there has been no shortage of dark clouds threatening recession: the Ukraine war-induced energy and food price shock, further price shocks due to a myriad of supply chain problems, what amounts to a recession in China in 2022, and tanking capital markets.
And yet, the widely predicted recessions set to hit the US, the euro area, the UK, South Korea, and many others, failed to materialise – hence the title of Societe Generale’s most recent Global Economic Outlook. Many of these clouds have lifted, but some linger, perhaps the most concerning the risks to China’s economy. So far it’s a case of heavy cloud, no rain.