I Don't Know... What Will Happen in 2022
...but some things seem inevitable
I don’t know what will happen in 2022, but there are 5 “C’s” that are dominating my thinking about it.
Climate
Is 2022 the year that the world starts to take the climate crisis seriously? My guess is probably not, but it might be the year that the world starts to panic.
I consider myself someone who keeps up with current affairs, but COP26 held in November 2021 seemed to pass by without much happening at all, other than certain countries stepping back from previous commitments.
Weather events are undoubtedly getting more extreme and more bizarre. The world is “changing before our eyes” as a result of climate change, the UN Secretary General Antonio Guterres has warned. 2021 saw record temperatures and rainfall, snow in Texas and Madrid, and wildfires in every continent. There is nothing to suggest that 2022 won’t be even more frightening.
My prediction is that the world will stop looking at national governments to take action and start to look to new technologies to reverse or slow down the impact of climate change. Where there are low barriers to change, we will slowly be able to start replacing legacy polluters, as we are starting to see with cars, but it is new technologies that will have the biggest impact.
Solar geoengineering and direct air capture are two technologies that I think the world will start to take seriously in 2022. Both are technologies that look to reduce the impact of emissions, and both come with controversies.
Solar geoengineering is aimed at releasing material into the atmosphere designed to reflect solar energy away from earth – in a similar way to the Icelandic ash cloud in 2010 and Mount Pinatubo in 1991, which resulted in cooling of the Earth by as much as 0.5 degrees.
Direct air capture takes a much simpler approach. It is well known that carbon dioxide in the air causes global warming, therefore machines that can remove it must be worth exploring. There are start-ups across the world that are racing to bring cost down and scale up, and Elon Musk recently tweeted that SpaceX would be looking to start a direct air capture programme.
These technologies are controversial for two reasons. Firstly, they undermine the efforts to reduce emissions at the source, but perhaps most importantly we just do not know what the knock-on implications may be. My guess is that 2022 might be the year those risks start looking unavoidable.
Covid
Coronavirus has dominated 2020 and 2021. 2022 will be the year that we start deciding how we live with it and within a ‘post-covid’ world.
In 2021 we slowly started going back to the office and the world seems to have arrived at something approaching a consensus that the future is one of ‘hybrid’ working. One issue with hybrid working is that many will take it to mean ‘flexible’ working – a scenario where the individual decides what is best for them.
It is understandable and fair that whilst the pandemic lives on, individuals should decide what is best for them and their families. It is when the pandemic settles into a state where it is manageable and safe to fully return to “normal life” (sometime in 2022) that this approach will start to cause problems for individuals and businesses.
Within the hybrid working construct, there is so much scope for disagreement on the details and best practices. The implication of spending more time at home than in the office for a 45-year-old parent of three, might be at complete odds with the implication of a 22-year-old young professional who is just starting their career.
Being in the office isn’t the same if it’s half empty, or if most conversations you have are still virtual. Once people are free of restrictions, companies that don’t get this right will see people leaving in droves and we are already seeing the start of this with the “great resignation”. Debates will dominate 2022 over how we should engage a workforce that have lost the ability to connect, and how we can monitor and appraise workers that have decided that their time is best spent at home.
At the end of 2021, the world waits with bated breath as the newest variant, Omicron, threatens to take us back to somewhere approaching square one. With any luck however, we will spend 2022 disagreeing on the fairest approach to office life, rather than locked down without a choice to make.
Crypto
The Economist says that 2022 will be the year that Crypto “grows up”. I wonder if it will also be the year that it cools down.
In the last few years, cryptocurrencies have gone from a niche concept on the edges of the internet, to a mainstream asset class that institutions and individuals alike are starting to include as part of their investment portfolios. 2021 saw the total market capitalisation of cryptocurrencies grow from under $1trn at the start of the year to close to $3trn in November. As well as the underlying market growth, new applications of the underlying technology emerged, giving rise to a craze which saw “NFT” named as the word of 2021 by Collins Dictionary.
Alongside the price growth, much of the talk during the year was around regulation and debate on what this might look like, and what it would mean for the price of the thousands of different coins that have emerged in the past couple of years. The rise and fall of Dogecoin and similar “meme” coins raised the question about what should be done to protect investors, and whether they wanted protecting at all.
2022 may be the year of regulation, or certainly where the talk of regulation takes more of a centre stage, as cryptocurrencies and blockchain become more widely known and lawmakers around the world look to have a crack at the most exciting development to hit finance in decades. This could cause what’s known in the space as “FUD” (Fear, Uncertainty, Doubt).
This could turn retail investors away, but those deep in the space will remain focused on consolidation, building, and on-boarding the masses into De-Fi, digital ownership and the untold promises of Web3 and blockchain.
Specifically when it comes to NFTs, 2022 will see the space move on from a place that much of the world views as the rich kids of twitter selling cartoon monkeys to each other for millions of dollars, to a game-changing technology that enables digital ownership. In years to come it will be a surprise that this was ever a controversial topic, but there is lots of work to be done before this technology becomes mainstream.
You might call all of this “growing up”, but if the retail spotlight starts to dim and developers head back underground, it might also mean a year in which the price of assets doesn’t grow in the way investors have become accustomed to. It is for certain that the big players, Bitcoin and Ethereum, aren’t going anywhere and the market capitalisation of the asset class as a whole is nowhere near its potential future peak, but given the craziness of 2021, and the work to be done, I predict that 2022 may be a bit of a ‘time out’ for Crypto.
China
Even without knowing much about China, it feels inevitable that 2022 will be an important year for the mammoth country and specifically its relationship with the US and their allies.
With weak and ineffective leadership at a national level in the West, 2022 may be the year that China begins to really stamp its authority on the world and makes itself the undisputed superpower.
The Winter Olympics, to be held in February in Beijing, will surely be a showcase of the immense organisation, strength and athletic performance that the Chinese have become notorious for. With the eyes of the world on Beijing, it is not just the athletes that will be focus of attention, but the growing list of Western countries whose diplomats are boycotting the games. The US have cited concerns about China’s human rights record as the reason for boycott, causing China to react angrily.
Tension with China and the US continues to grow, as it seems to have done year-on-year. Depending on what you read, it could be argued as to which side is providing the most provocation, but the situation and implications of potential aggression from China towards Taiwan are concerning. According to reports, China is currently ‘buzzing Taiwan’s airspace with fighter jets, using mock-ups of American aircraft carriers for target practice, and trying out hypersonic weapons’.
Regardless of whether any military action is forthcoming, it seems extremely likely that China will once again dominate news in 2022. In 2021, stories of well-known people ‘going missing’ were in Western media, and concerns for Jack Ma and Peng Shuai remain. Who knows who and what will be next?
One thing is for sure, the growth of China as a superpower and world leading economy has been immense. They have kept their heads down for decades, building and shipping and iterating to the point they are at now, with nearly 1.5bn people, hardworking and loyal to the totalitarian government. If they can shake off the effects of Covid faster than the rest of the world, 2022 may be the year that their dominance truly begins.
Cities
Living in the UK, the theme that has dominated the news and conversation in the past few months is the ineffective and downright laughable state of national leadership.
Looking to our friends across the pond, many breathed a sigh of relief when Joe Biden replaced Donald Trump in power this year, but unfortunately all the current president has been able to achieve so far is the printing of extra money for stimulus, which is likely to cause inflationary problems down the line.
With faith in national leaders waning, and no national elections in the US and UK scheduled for another few years, is it the turn of cities and mayors to take centre stage?
In the US, we are already seeing the rise of mayors who are differentiating and willing to take a fresh approach to leadership. Mayor Suarez, Mayor of Miami has turned heads with a new outlook, referring to himself as the CEO of the City, resulting in a tech boom.
In the UK, in the face of the Covid crisis, Andy Burnham, Mayor of Manchester, was one of the leading voices against the government and specifically against lack of support for Northern cities whose finances were creaking loudly under the strain of restrictions.
Given the failure of national leaders to lead the fight against climate change (as mentioned in the Climate section) it may also fall to cities to take the reins this year. Cities currently consume 70% of all energy and generate ¾ of all carbon emissions globally and I predict that it in 2022 it will be cities that lead the initiative in reducing emissions.
2022 will see the next mayoral election in New York, which could also trigger a fresh approach to leadership and attention turned back to the city. Closer to home, in London, it may be the year that Sadiq Khan takes centre stage when it comes to the Labour party truly providing effective opposition to the Conservative government at national level. Leadership and clarity in the capital is exactly what’s required if we are going to move into a post Covid world effectively and sustainably.