The Incentives Edition — #93

Good morning,

I spent most of this week not thinking, making this intro very short.

Enjoy!

Anna

China takes the lead in global technology race

TECHNOLOGY

Western democracies fall behind in the global technology race, jeopardising their ability to drive scientific breakthroughs, retain talent, and control vital technologies. According to research from ASPI, China has emerged as the leading science and technology superpower, establishing a significant advantage in critical and emerging technology domains.

China's dominance is evident in ASPI's Critical Technology Tracker, which shows its control over 37 out of 44 tracked technologies, including defence, space, robotics, AI, and quantum technology. Chinese research institutions consistently outperform the rest of the world, publishing nine times more high-impact research papers in specific fields. Importing talent and knowledge further strengthens China's position, with many high-impact research papers authored by researchers trained in Australia, New Zeeland, the United States, the United Kingdom, and Canada.

China excels in defence and space-related technologies, surprising US intelligence with its rapid advancements in nuclear-capable hypersonic missiles. In the past five years, China has generated almost half of the world's high-impact research papers on advanced aircraft engines, including hypersonics. While the US ranks second in most technologies, a substantial gap exists between China, the US, and other countries. India and the UK lead a second-tier group, occasionally joined by countries like South Korea, Germany, Australia, Italy, and Japan.

China’s research lead and expertise concentration in strategic sectors have both short and long-term implications for democratic nations. China's dominance extends beyond current technology development, potentially influencing future emerging technologies. The unchecked authority of an authoritarian state in critical and military technologies, lacking transparency and scrutiny, could result in a significant shift in global power dynamics. The Chinese Communist Party's readiness to employ coercive measures outside the established order further magnifies the risks associated with China's technological superiority.

To address these findings, democratic nations are urged to prioritise a strategic "critical technology" initiative. Governments worldwide must catch up to China and focus on the Indo-Pacific region as the centre of technological innovation and competition. While China currently leads, the combined strengths of democratic nations offer an aggregate advantage in various technology areas. Democracies must recognise and leverage their potential to shape the technological landscape through collaborative and individual actions.

Shell scraps targeted reductions in oil output as profits soar

CLIMATE

Shell CEO, Wael Sawan, plans to maintain or slightly increase oil production until 2030 to regain investor confidence. The decision comes as Shell grapples with poor returns from renewables while oil and gas profits continue to soar. Sawan will announce the abandonment of a target to reduce oil output by 1% to 2% per year, as the company has already achieved its production cut goals through asset sales. His approach departs from his predecessor's carbon reduction targets and energy transition strategy.

Shell has recently scrapped several offshore wind, hydrogen, and biofuel projects due to projections of weak returns. The company is also divesting its European power retail businesses, which were once considered crucial for its energy transition. However, Shell reported record profits of $40 billion last year, driven by strong oil and gas prices. Sawan, who took over in January, aims to improve Shell's performance and insists that oil and gas will remain central to the company's operations without compromising profits.

Shell's decision to maintain oil production aligns with BP's earlier move to scale back its plans to reduce oil and gas output by 40% by the end of the decade. Returns from oil and gas typically outperform solar and wind projects, making them more attractive from an investment perspective. Sawan remains committed to Shell's target of becoming a net-zero emitter by mid-century but recognises the need for significant investments in oil and gas to meet growing demand and maintain production levels.

Investors eagerly await details on Shell's shareholder payout plans, expecting a significant dividend increase. The company aims to narrow the performance gap with its US rivals, Exxon Mobil and Chevron, which plan to expand fossil fuel output. Shell’s focus on improving performance and returns reflects the need to excel in both oil and gas production and the development of low-carbon alternatives. Analysts anticipate a potential 20% dividend increase and higher overall shareholder payouts.

Icelandic parliament passes landmark law banning conversion therapy

HUMAN RIGHTS

In a resounding majority, the Icelandic parliament has approved a law prohibiting conversion therapy practices based on sexual orientation, gender expression, and gender identity. Joining several countries, including Canada, Brazil, Spain, and New Zealand, Iceland took a decisive stance against these harmful practices. The bill, proposed by Viareisnar parliamentary party chair and Reform Party MP Hanna Katrin Friariksson, received unanimous support. Friariksson emphasised that conversion practices, rooted in ignorance and reactionary ideas, have no place in society.

The ban received overwhelming support in the Icelandic parliament, demonstrating broad backing for the legislation. However, there were attempts by anti-trans hate groups influenced by English rhetoric to oppose the bill, using unscientific and discriminatory arguments. British anti-trans accounts on social media and discussions on the parenting message board Mumsnet falsely celebrated that the ban had been dropped.

Iceland, known for its progressive stance on LGBTQ+ rights, has been a trailblazer in many respects. In 2009, the country made history by appointing Jóhanna Sigurardottir, an openly gay politician, as its first female prime minister. Currently, Katrín Jakobsdóttir, a representative of the Left-Green Movement, serves as Iceland’s prime minister. The nation ranks highly on Equaldex’s global LGBTQ+ rights index. With the comprehensive conversion therapy ban, its position is expected to further improve. Iceland recognises same-sex marriage, allows citizens to change their registered gender without medical interventions and register as a third gender with the ‘X’ gender marker on official documents. Same-sex couples can legally adopt in Iceland, and discrimination against LGBTQ+ people is illegal.

Double-check the headlines

Just making sure you didn't miss any major world events this week.

• A dam and hydroelectric power plant in a Russian-controlled part of southern Ukraine were destroyed, creating wide-scale flooding of towns and villages.

• Ukrainian President Volodymyr Zelenskyy confirmed that "counteroffensive and defensive actions" are underway against Russia.

• Former British Prime Minister Boris Johnson abruptly quit as a member of parliament on Friday in a furious protest against lawmakers investigating his behaviour during the Covid-19 pandemic.

• In Colombia, four children that went missing after a plane crash were found alive after 40 days in Amazon.

• Apple launched Vision Pro, high-tech goggles that blend the real world with virtual reality. The $3,500 device will offer "augmented reality" and introduce "spatial computing".

• Reports suggest China is establishing intelligence operations on Cuba, Still, according to a Biden official they have operated a spy base there for years.

• In the United States, former President Donald J. Trump was indicted on 37 criminal counts connected to keeping classified government documents.

• United Nations and the United States halted food assistance in Ethiopia, where 20 million people rely on aid, investigate the disappearance of supplies.

• Honduras opened an embassy in China after the Central American nation cut diplomatic relations with Taiwan earlier this year.

• Nine people were killed in an attack claimed by al-Shabaab Islamist militants at an upmarket restaurant in the Somali capital, Mogadishu.

One long

Yale Environment 360

The Upper Atmosphere Is Cooling, Prompting New Climate Concerns

A new study reaffirming that global climate change is human-made also found the upper atmosphere is cooling dramatically because of rising CO2 levels. Scientists are worried about how this cooling could affect orbiting satellites, the ozone layer, and Earth’s weather.

Five short

1. Listen

The nuclear family is a very recent idea of how to organise our lives; what is the consequence and are there alternatives? Everyone should listen to this episode of The Ezra Klein Show.

2. Watch

Learn some negotiation skills from Harvard Business Professor Francesca Gino as she breaks down the Pierce Acquisition in “Succession” S4.E1.

3. Remember

Sometimes good things fall apart for better things to fall together.

4. Change

Put a watering can in the sink. Fill it with the water you waste in the kitchen when cooking and cleaning. Water your plants with less guilt.

5. Try

Brown peaches in butter until they turn golden. Serve with whipped cream.

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Thank you for reading! Every time a post gets shared, it makes me very happy.

/Anna