adapting my business - cómo evaluar la información climática en una empresa - bernd eggen

How to evaluate climate information in a company

Bernd R Eggen, PhD

Climate Science Advisor

Contents

• Introduction

• Concepts

• Case Studies

– Energy

– Banking

– Insurance

– Transport

• Conclusions

07/Jun/2012 Adapting my business 2

Introduction

IEA, May 2012: Global carbon-dioxide emissions increase by 1.0 Gt in 2011 to record high (31.6 Gt).

“The new data provide further evidence that the door to a 2°C trajectory is about to close” IEA Chief Economist Fatih Birol

Climate Change Adaptation ≈ Climate Risk Management


Introduction

• 1997 – 2006 Schlumberger, including Carbon Capture and Storage

• 2007 – 2009 UK Met Office Hadley Centre

• 2009 – 2010 Halcrow (Engineering Consultancy)

• 2010 – present BRE Climate Consulting Ltd

• 2011 – present UK Health Protection Agency


Climate Observations - Temperature

• Widespread warming has been observed over Spain since 1960 with greater increases in summer than winter.

• Fewer cool nights and more warm nights, and fewer cool days and more warm days.

• There has been a general increase in summer temperatures averaged over the country as a result of human influence on climate, making the occurrence of warm summer temperatures more frequent and cold summer temperatures less frequent.


Climate Observations - Rain

• There has been a reduction in the amount of annual rainfall in the Iberian Peninsula since 1960 with the largest reduction in the northwest and the lowest reduction in the east.

• Spain is affected by precipitation extremes (i.e. droughts, hail storms, flooding).


Decadal Trends: Temperature & Rainfall


Met Office Crown copyright

Influence of Anthropogenic Forcings


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Climate Change Projections

• For the A1B emissions scenario, increases in temperature of up to around 4°C by end of 21st century are projected over Spain, with the highest agreement between models towards the south of the country.

• Projected decreases in rainfall over Spain could be >20% in the southwest of the country, and between 10% and 20% over other parts.


Impacts of Climate Change

• Increases in water stress.

• Uncertainty whether extreme short-term precipitation and associated pluvial flooding may either increase or decrease.

• No firm conclusions with regards to changes in fluvial flood hazard, likely risk to decrease.

• Sea level rise (SLR) impacts in coastal areas could be large in the absence of adaptation.


Emerging Issues

• Hurricanes / Tropical Cyclones (Vince 2005, Gordon 2006, Helene 2006, Grace 2009, Otto 2010, Katia 2011).

• “Medicanes” (tropical-like storms over the Mediterranean Sea), e.g. Tropical Storm 01M, 2011.


Concepts

• Climate change (CC) manifests itself through changes in frequency of extreme weather events, new weather events (in historic sense) as well as in shifting averages (e.g. sea level).

• CC projections have a degree of quantitative (i.e. meteorological parameters), temporal & spatial uncertainty.

• In the short term climate variability is more important than climate change.


Concepts / Questions

• Given the current uncertainties in climate projections, how can companies plan adaptive measures ? Reduce risk of mal-adaptation ?

• How can a company evaluate key current and future vulnerabilities in their assets, operations, supply and distribution chains ?

• Are there opportunities from climate change adaptation for your company ?


Concepts

• Some companies may have a quantitative understanding how CC issues affect them, or only a qualitative idea of their vulnerabilities; some organisations may think CC is not an issue.

• Insights into Climate Change Adaptation by UK Companies (CDP, Mar 2012) finds: 80% of FTSE 100 companies identify substantive risks to their business as a result of climate change.


Insights into CCA by UK Companies

• The quantification of the financial implications of risks and costs of adaptation by corporations appears to be quite poor, with many risks unquantified. As a result there is a potential that these risks will not be incorporated properly into corporate strategies.

• Less than half of FTSE 100 companies incorporate climate adaptation into their business strategies. Among those that do, the main focus is on assets, followed by logistics and finance.


Framework - Types of Adaptation

• Planned adaptation - the result of a deliberate policy decision, based on an awareness that conditions have changed or are about to change, and that action is required to maintain, or achieve, a desired state.

• Reactive adaptation - adaptation that takes place in response to the consequences of a particular event.

• Anticipatory adaptation - takes place before impacts of climate change are observed.

• Spontaneous (or autonomous) adaptation - not a conscious response to climatic stimuli, but triggered by ecological changes in natural systems, and by market or welfare changes in human systems


Types of Climate Risk Management

• Scoping studies, then in-depth assessments;

• Due diligence analysis;

• Technical support for company reports;

• Climate change advisory.

• “Poor risk assessment leads to risks not being properly incorporated into strategic decision-making.” (from CDP report)


Adaptation Strategies Adaptation strategies Description Examples of adaptive actions

Preventing losses Take action to reduce the exposure to climate impacts

Building sea walls, flood barriers

Tolerating losses Accept losses where it is not possible or cost-effective to avoid them

Accept reduced crop yield

Spreading or sharing losses

Distribute the burden of impacts over a larger region or population beyond those directly affected by the climate event

Insurance of assets

Changing use or activity

Switch of activity or resource use to one better suited to the changed climate

New business opportunities

(e.g. tourism, agriculture, insurance)

Changing location Migrate to an area which is more suitable under the changed climate

Assets moved away from areas at risk of flooding

Restoration Restore assets to their original condition following damage or modification due to climate

Re-building or replacement of damaged assets


Relevant steps for climate change adaptation


Project Design & Resilience Opportunities for Projects Extreme Event Effect on Infrastructure / Projects

Flood defences Sea level rise Inundation, loss of airdraft (e.g. bridges / cranes)

Coastal areas, ports Tropical storms (e.g. hurricanes)

Flood and wind damage, operational downtime

Drainage and sewers Flooding Flood damage, operational downtime

Water storage, reservoirs Drought -> water scarcity Operational downtime, subsidence

Building design Heat Waves Damage to materials, operational downtime

Infrastructure in Arctic regions Permafrost thaw Subsidence

Transport infrastructure [many of the above] [many of the above]

Transport planning [many of the above] Shift in transportation patterns (e.g. tourism)

Economic modelling [many of the above] [many of the above]

Environmental modelling [many of the above, and more]

[many of the above, and more]


Case Study: Energy Phase 2 • EP2 followed scoping study (with 3 energy

companies), this was industry-funded, involving 11 UK energy companies, focusing on the priorities identified by the earlier study.

• How climate change will affect energy generation; distribution and transmission, and demand. Study identified areas where further research is required.


Case Study: Energy Phase 2

• Improve demand forecasting and planning up to 10 years ahead.

• Underground cables require “de-rating” because of higher soil temperature.

• Efficiency of CCGT lowered with higher air temperature.

• Urban heat island effect can exacerbate warming trends.


Case Study: Energy Phase 2


Climate Change Adaptation Planning Guide for EP2. This schematic gives users a guide to when the energy industry should plan and adapt to climate change, based on the results of EP2.

Case Study: Barclays

• Storm Shelter: Managing Climate Risks in Africa (commissioned by Barclays Bank).

• Comprehensive overview of the economic impacts of climate variability & change in Africa (current and future climate risks).

• Infrastructure adaptation opportunities.

• The specific challenges for businesses in managing the impact of climate change.


Case Study: ABI • “The Financial Risks of Climate Change” used

current climate and insurance catastrophe models to examine the financial implications of predicted global temperature rises of 2, 4 and 6 °C on the insured cost of flood and windstorm damage in the UK.


Case Study: ABI

• Assuming a global temperature rise of 4°C: Inland flood component of insurance premiums could increase by around 21% across UK and insured flood losses in UK could rise by 14% to £633 million.

• The average annual insured wind losses in the UK could rise by 25% to £827 million assuming a 1.45° southward shift in storm track across the UK. The insured wind-related loss from winter season windstorms in the UK occurring on average once every 100 years could rise by 14% to £7.3 billion.


Case Study: Transport Sector

• Eurocontrol “Challenges of growth”.

• Addresses potential economic and operational impacts of climate change on aviation.


Case Study: Eurocontrol

Apart from physical parameters (right), the study also looked at:

• The effect of CC on public attitudes to air travel;

• CC impacts on the air transport industry;

• The impact of CC on aviation markets.


Conclusions I

• Climate change beyond 2°C temperature rise by end of 21st century becoming more likely, as mitigation efforts so far not effective.

• Many companies have started to include climate change adaptation issues in their climate change risk strategy, especially where governments have provided policy support.

• Utility companies have in general investigated risks more quantitatively than others.


Conclusions II

• Important to investigate knock-on effects from climate impacts onto infrastructure, supply & distribution chains etc.; “360° view” required.

• Be mindful of extreme events (“climate shocks”), not just slowly moving averages.

• There are opportunities from climate risk management, not just threats.

• Effective climate risk management makes a company more resilient & competitive.


Further Reading I

Climate change adaptation for UK businesses (MOHC & CBI)

Climate change and underground cable performance (EP2)

The Financial Risks of Climate Change (MOHC & ABI)

Storm shelter: Managing climate risks in Africa (MOHC / Barclays)


Further Reading II

Climate Change Adaptation & Resilience Study (Halcrow & WMCCAP)

Adapting to Climate Change (Halcrow / Welsh Water)

Spain – Climate: observations, projections and impacts (MOHC)


Further Reading III

• Adapting to climate change in the infrastructure sectors (PWC, Nov 2010) URL http://archive.defra.gov.uk/environment/climate/documents/infrastructure-pwc-full.pdf

• Insights into Climate Change Adaptation by UK Companies (CDP, Mar 2012) URL http://archive.defra.gov.uk/environment/climate/documents/cdp-adaptation-report.pdf


http://archive.defra.gov.uk/environment/climate/documents/infrastructure-pwc-full.pdf






http://archive.defra.gov.uk/environment/climate/documents/cdp-adaptation-report.pdf






Some Key Terms

Adaptation Reporting Power = ARP (Defra = Department for Environment, Food and Rural Affairs)

UK Climate Change Risk Assessment = CCRA (Defra)

National Adaptation Programme = NAP (Defra)


adapting my business - cómo evaluar la información climática en una empresa - bernd eggen

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