What the Cold War and the Space Race can tell us about climate change

Of the global challenges humanity has met in the past century, climate change arguably poses the biggest test for international collaboration.



Global Climate Change Team

Reactions to global challenges vary, but generally land somewhere on a scale between hostile and collaborative.

The Cold War was largely hostile and competitive, and ended with the dissolution of the USSR; deemed a victory for “The West”.

The Space Race was competitive in the start (i.e. Apollo vs. Vostok) but collaborative by the end (i.e. the International Space Station).

The challenge of climate change creates a similar set of potential outcomes, from the hostile to the competitive and all the way to the collaborative.

At one extreme, incentives to cheat – “environmental arbitrage” - provide higher profitability for polluters as pollution impacts are externalised. Those not cheating will face higher costs to abate the impacts (which are internalised). This is a negative outcome for those wishing to abate climate change.

At the other end of the scale, collaboration and positive forms of competition can see vast advances in industries. Take China’s nascent advancement in electric vehicles (EVs) as an example. By building a new industry, the rest of the world has been challenged to innovate too.

If we take the Space Race as precedent for when a challenge is taken seriously, then the investment implications can be substantial. At its peak during the Apollo missions, NASA’s budget was approximately three times what it is now, in real terms. The technological spinoffs were substantial. Water purification is a prime example – the water needs of crew on a spacecraft demanded extensive recycling of waste water back to drinkable water. The race also needed a way to generate power without carrying further fuel into orbit. This led to advances in solar cells, which allowed for power generation from an abundant source. The invention of freeze dried foodstuffs and advances in tyres – to name but a few – were also prompted by the sprint to space.

Climate change likely provides an even greater challenge than the Space Race or the Cold War. The reactions could develop into healthy competition and collaboration and see meaningful investment. However, whilst positive steps like the Paris Climate Agreement suggest hostility is indeed giving way to collaboration, the levels of investment in abating climate technology remain too low.

The views and opinions contained herein are those of Schroders’ investment teams and/or Economics Group, and do not necessarily represent Schroder Investment Management North America Inc.’s house views. These views are subject to change. This information is intended to be for information purposes only and it is not intended as promotional material in any respect.


Global Climate Change Team


Climate Change

Please consider a fund's investment objectives, risks, charges and expenses carefully before investing. The Schroder mutual funds (the “Funds”) are distributed by The Hartford Funds, a member of FINRA. To obtain product risk and other information on any Schroders Fund, please click the following link. Read the prospectus carefully before investing. To obtain any further information call your financial advisor or call The Hartford Funds at 1-800-456-7526 for Individual Investors.  The Hartford Funds is not an affiliate of Schroders plc.

Schroder Investment Management North America Inc. (“SIMNA”) is an SEC registered investment adviser, CRD Number 105820, providing asset management products and services to clients in the US and registered as a Portfolio Manager with the securities regulatory authorities in Canada.  Schroder Fund Advisors LLC (“SFA”) is a wholly-owned subsidiary of SIMNA Inc. and is registered as a limited purpose broker-dealer with FINRA and as an Exempt Market Dealer with the securities regulatory authorities in Canada.  SFA markets certain investment vehicles for which other Schroders entities are investment advisers.”

For illustrative purposes only and does not constitute a recommendation to invest in the above-mentioned security/sector/country.

Schroders Capital is the private markets investment division of Schroders plc. Schroders Capital Management (US) Inc. (‘Schroders Capital US’) is registered as an investment adviser with the US Securities and Exchange Commission (SEC).It provides asset management products and services to clients in the United States and Canada.For more information, visit www.schroderscapital.com

SIMNA, SFA and Schroders Capital are wholly owned subsidiaries of Schroders plc.