HIGHLIGHTS
• A study was conducted to evaluate the relationship between supply chain disruptions and global warming.
• Results from one of the three scenarios, which involved rapid and unconstrained economic growth and energy use, result in a total economic loss that is estimated to be 500% higher by 2060 than the more sustainable model. 
• The lubricant field will be facing added supply chain stress that will impact not just existing technologies but emerging ones such as battery electric vehicles. 

As more attention is paid to sustainability, organizations are gaining a better understanding of their supply chains for obtaining raw materials and selling products. To meet sustainability goals, such concepts as product carbon footprint must be determined to assess how chemical substances are produced, used and disposed of during their life cycles. 

Figure 2 from the STLE 2023 Report on Emerging Issues and Trends in Tribology and Lubrication Engineering¹ connects sustainability to supply chain by showing where footprint and life cycle analysis are related to such terms as Scope 1, 2 and 3 emissions and cradle-to-grave. Over the past decade, supply chains became increasingly global with developing countries becoming more involved in supplying raw materials that are converted into finished products in the developed world. One example is the need to source minerals such as cobalt required for use in battery electric vehicles from countries such as the Democratic Republic of Congo. 



With global warming taking place at this time, attention needs to be paid to how this phenomenon may impact global supply chains and what ramifications may occur that could upset the flow of raw materials and finished products for applications such as battery electric vehicles. Dabo Guan, professor in climate change economics and the low carbon transition at University College London in London, UK, says, “We started to look at this problem over 10 years ago when examining the impact of fluvial footprints in such cases as flooding.” 

Guan expanded this research to gain a better understanding of how global warming will impact global supply chains and whether that will lead to economic loss. He says, “In doing this work, we know that an increase in temperature will increase heat stress on individuals that can negatively affect human health. The result is a reduction in labor productivity as workers face the prospect for added heat stress.” 

To gain an understanding of the relationship between supply chain disruptions and global warming, Guan evaluated results by examining the following three discipline models: global climate, epidemiological and equilibrium global trade. The objective was to evaluate how heat stress affects raw material and product flow through the global supply chain. 

This analysis involved examining three scenarios combining various representative concentration pathways (RCPs) and shared socioeconomic development pathways (SSPs). Guan says, “The first scenario involves rapid and unconstrained economic growth and energy use, the second scenario is a ‘middle of the range’ pathway where there is some attempt at mitigating global warming, and the three scenario represents a global move to a more sustainable trajectory.” 

Global economic loss 
The researchers found that global economic loss will be realized through disruptions in supply chains. Total global economic loss was segmented into health loss, labor productivity loss and indirect loss for the 2030-2040, 2040-2050 and 2050-2060 timeframes. The total economic loss was determined to be 500% higher by 2060 for the unconstrained economic growth and energy use model compared to the more sustainable model. 

In assessing economic losses based on a reduction in gross domestic product (GDP), the unconstrained growth model generated a GDP loss of 3.9% by 2060 with supply chain disruptions accounting for a significant percentage. Guan says, “We found that global GDP loss steadily increased from 0.1% during the 2030-2040 decade to 1.5% for the 2050-2060 decade.” 

To better understand the source of this decline in economic activity, the researchers analyzed how different global regions were impacted. For all scenarios, the most severe total losses are found in Central and South Africa, Southeast Asia and Latin America. Guan says, “Under the rapid and unconstrained economic growth and energy use scenario, persistent and severe heat stress directly contributes to substantial disruptions beyond the regional scale and through to global supply chains.” 

Guan provides the example of the developing country of Tanzania in Africa, which is economically highly dependent on its mining sector. He says, “Tanzania’s economy will suffer due to the continuing trend of global warming. This will impact developed countries such as China and the U.S. from a supply chain perspective because they are dependent upon minerals for producing electronics such as battery electric vehicles.” 

The researchers predict that under the rapid and unconstrained economic growth and energy scenario, China will face indirect economic losses due to supply chain disruptions of 2.7% of GDP compared to only 0.4% GDP under the least severe scenario. Brazil and Norway also will see significant reductions in GDP at a similar range to the figures provided for China. 

Besides mining, Guan points out that other sectors that will significantly be impacted by global warming include agriculture and construction. He says, “Our analysis shows that the least developed countries are going to suffer the most and have the least ability to adapt. The result is global supply chains will be stressed and the economies of developed countries will also suffer.” 

Guan indicates that other industries of pertinence to the lubricant field that will suffer are those supplying high-end machinery equipment and chemical products. Significant indirect economic losses will take place in European countries such as Sweden. 

Guan says, “When we started this study in 2021, global warming moved temperatures to their highest point which was 1.1°C above the 19th century pre-industrial baseline. This figure climbed to 1.4°C in 2023, which is now the hottest year on record.” 

The message from Guan is that the lubricant field will be facing added supply chain stress that will affect raw material and mineral supply impacting not just existing technologies but also emerging ones such as those being developed for battery electric vehicles. 

When asked about the current trend toward regionalization of supply chains, Guan says, “The movement to regionalize supply chains will not reduce the global economic loss that will be encountered by all countries. The best way to keep supply chains robust is to maintain them on a global basis. This approach will help to buffer any possible breaks in supply, but providing an adaptive mechanism that will ensure specific raw materials and finished products can continue to move from Point A to Point B.” 

Additional information can be found in a recent study² or by contacting Guan at d.guan@ucl.ac.uk.

REFERENCES
1. www.stle.org/2023EmergingTrendsReport
2. Sun, Y., Zhu, S., Wang, D., Duan, J., Lu, H., Yin, H., Tan, C., Zhang, L, Zhao, M., Cai, W., Wang, Y., Hu, Y., Tao, S. and Guan, D. (2024), “Global supply chains amplify economic costs of future extreme heat risk,” Nature, 627 (8005), pp. 797-804.