Transcript climate vulnerabilities and risks

Assessing climate risks and
vulnerabilities of Albania’s
energy sector
12 March 2009
Dr Richenda Connell
Chief Technical Officer & Co-founder, Acclimatise
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Overview of presentation
•
•
•
•
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Aims of World Bank assignment
Introducing the team
Aims of 10 March workshop
Overview of climate change
Decision-making in the face of climate risks and
uncertainties
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Aims of World Bank assignment
• Overall aims: to help support the development of robust
energy sector policies and projects, in the face of changing
climate risks
• 10 March workshop: to help develop understanding of
climate vulnerabilities and risks to Albania’s energy
sector
• Second workshop (April 2009): to help identify priorities
for climate change adaptation and undertake rapid cost
benefit analysis
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Acclimatise
• Acclimatise helps governments and businesses assess and manage
the risks and opportunities of inevitable climate change by:
– Bridging the gap between the scientific community and the corporate
world, reviewing the latest climate change science, providing guidance on the
potential business and financial impacts.
– Working with our clients to understand direct and indirect climate change
impacts for their strategies and business models.
– Assessing the implications for financial performance, as well as brand,
reputation and litigation risk.
– Advising on the climate change strategies being developed by our clients' key
stakeholders, including governments, regulatory agencies, investors, banks,
insurers, analysts and NGOs.
– Advising on robust strategies to manage risks and uncertainties and
realise business opportunities.
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WorleyParsons
WorleyParsons is a leading provider of professional services to the resource &
energy sectors and complex process industries
Infrastructure & Environment
Power
Complete solutions for the
transportation, coastal & marine,
water & wastewater, resources &
energy, municipal and urban
infrastructure sectors
Renewable energy, clean coal,
nuclear and natural gas generation,
transmission networks and retrofit
project solutions from pre-feasibility
to asset operation and maintenance
Hydrocarbons
Minerals & Metals
Full-scope global project delivery
in deepwater, floating, subsea &
conventional structures, topsides,
onshore oil & gas, pipelines,
LNG, and refining &
petrochemicals
Delivering comprehensive “mine to
market” projects and solutions in
base metals, alumina, aluminium,
coal, iron ore, steel and chemicals
across the world
A range of services and technologies that
profitably embed environmental, social and
financial sustainability into all aspects of the
project life-cycle.
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Albanian experts
• Prof Dr Eglantina Demiraj Bruci, National Project
Coordinator, UNDP/GEF Climate Change Programme
• Dr Besim Islami, Expert on Energy and Climate Change
• Both are lead authors of Albania’s First and Second
National Communication to the United Nations Framework
Convention on Climate Change (UNFCCC)
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Overview of 10 March workshop
Working sessions discussed:
• Overall context, objectives and strategies for Albania’s
energy sector – for existing and planned future energy
assets
• Albanian experts’ experience of energy sector climatic
vulnerabilities, sensitivities and critical performance
thresholds
• Albanian experts’ views of the risks posed by changing
climate conditions
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Overview of climate change
Decision-making in the face of
climate risks and uncertainties
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The natural greenhouse effect
Sunlight
passes
through the
atmosphere..
SUN
Most escapes
to outer space
and cools the
earth...
but some is
trapped by water
vapour, and keeps
the earth warm
enough for us
and
warms
the
earth.
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Risk Management Limited 2009
infra-red
“heat”
radiation
is given off by
the earth
The enhanced greenhouse effect
Sunlight
passes
through the
atmosphere..
SUN
and
warms
the
earth;
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Risk Management Limited 2009
Some escapes
to outer space
and cools the
earth, .
but some is
trapped by water
vapour, and
keeps the earth
warm enough
for us.
infra-red
“heat”
radiation
is given off by
the earth.
A NEW
BALANCE IS
ACHIEVED AT A
HIGHER
TEMPERATURE
But now,
more is
trapped by
greenhouse
gases, and
heats the
earth further,
until…
Carbon dioxide levels are rising fast
• Carbon dioxide
concentrations in the
atmosphere are higher now
than at any time during the
past 650,000 years
• Man-made emissions have
already increased CO2
concentrations by 1/3
compared to pre-industrial
levels
• By mid-century,
concentrations are expected
to be 2x pre-industrial levels
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Source: IPCC
Climate is changing
This map
shows
observed
changes in
physical and
biological
systems from
1970-2004
Source: IPCC
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Climate change can not be stopped
• Changes until about 2040 are
Inevitable
climate
already inevitable
change
• Changes later in the century will
depend on greenhouse gas
emissions in the next couple of
decades
• We need both to reduce
greenhouse gas emissions
(‘mitigation’) and adapt to
inevitable climate change
• Adaptation strategies need to
Annual average global temperature increases
be robust to climate
to 2100 under different greenhouse gas
uncertainties
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emissions scenarios, relative to 1980-1999
baseline
Assets designed based on historic
climate data may no longer be robust
Increasing CO2 concentrations
Increasing temperatures over land and sea
Increasing risk of heat waves
Rising sea levels
Changing precipitation patterns - increasing drought
and flood risks
• Possible increasing storm intensities & storm surge
heights
•
•
•
•
•
Europe summer 2003: US$15bn
economic losses, ca. 35,000 deaths Hurricane Katrina: US$40bn-60bn
insured losses, ca. 2,000 deaths
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Higher confidence
Lower confidence
European summers like 2003 will be
considered ‘normal’ by 2040 and ‘cool’ by 2060
Summer 2003
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Climate change projections for Albania
Annual changes in temperature
Changes in temperature, summer
6
8
7
6
5
4
3
2
1
0
1990
change (°C)
change (°C)
5
4
3
2
1
0
1990
2025
year
2050
2100
2025
2050
2100
Changes in precipitation, summer
2100
0
-101990
2025
2050
change (%)
change (%)
annual changes in precipitation
0
1990
-5
2025 year 2050
-20
-30
-10
-40
-15
-50
-20
-60
year
2100
• Annual increase in
temperature: 1.0, 2.0
and 4.1°C by 2025,
2050 and 2100
• Decrease in annual
precipitation: 3%, 6%
and 12% by 2025,
2050 and 2100
• Decrease in summer
precipitation: 10%,
22% and 42% by
2025, 2050 and 2100
year
[Source: E. Bruci]
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Effects of climate change on space heating and
space cooling energy demand in Shkoder region Alternative energy scenario
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[Source
Besim
Islami]
Climate risks, uncertainties and decisionmaking
• There will always be natural climate
variability
• Climate change trends will be superimposed
on natural variability
• The effects of natural variability may
dominate climate change effects for several
decades
• We need to make decisions
that are robust to climate
variability and future climate
Variability and
change
trends in
precipitation for
• This is particularly important
for long-lived assets, which Durres and Tirana
(Source: E. Bruci,
need to perform for decades
HMI, 2008)
into the future
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Albanian power system (GWh)
Import
Small HPP
Thermal Pow er Plants
Hydro Pow er Plants
2006
Small HPP
0.53%
Import
15.00%
Thermal
Pow er
Plants
1.32%
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
6750
6500
6250
6000
5750
5500
5250
5000
4750
4500
4250
4000
3750
3500
3250
3000
2750
2500
2250
2000
1750
1500
1250
1000
750
500
250
0
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[Source
Besim
Islami]
Hydro
Pow er
Plants
83.15%
Stakeholders are concerned about
climate change and adaptation
• “The World Bank Group will give considerable attention to
strengthening resilience of economies and communities to
increasing climate risks and adaptation… Adaptation will require
more resilient infrastructure, broader disaster relief and
preparedness measures, and new agricultural technologies and
practices to counter increased climate risks.”
• European Commission: “Climate-proofing must be integrated into
the Environmental Impact Assessment (EIA) Directive and the
Strategic Environmental Assessment (SEA) Directive.”
• Investors: “To help investors analyse these risks, investors
encourage companies to analyse and disclose material, physical
effects that climate change may have on the company’s business
and its operations, including their supply chain.”
• Banks: Starting to incorporate climate risk screening into credit risk
assessments and due diligence processes
• Insurers are voicing their concerns – some now refuse to insure in
vulnerable locations
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Changing climate risks can be incorporated
into financial models
• Importance of cash
flow forecasting
• Impact on profit of
small % increase in
operating costs
• Impact on profit of
decrease in income
• No provision for
unplanned additional
investment
• Effect on investor
confidence
Cost & income pressures on free cash if climate risks are ignored
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Climate risk management can be integrated
into the asset lifecycle
• For new assets, changing climate risks should be considered at the
‘feasibility’ and ‘front end engineering design’ stages
– There may be low cost opportunities to build in resilience for climate
change
• For existing assets, building in resilience for climate change should
be considered as part of major refurbishments and upgrades
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Key messages from 10 March workshop
Strengths
Weaknesses
Water resources for hydropower
Good transmission grid
Feed in tariffs
High dependence on hydropower
Existing assets in need of rehabilitation
Lack of data on windspeeds
Legacy of contamination around oil wells
Opportunities
Threats
Energy efficiency
Diversify energy sources
Solar water heating
Reduced winter energy demand
Rehabilitation of existing hydropower
facilities
Design of new energy assets
Private sector investment
Impacts on hydropower production of
decreases in summer precipitation
Small efficiency losses for thermal power
plants with higher temperatures
Increased summer energy demand
Dry periods followed by sudden downpours
of rain – pollution
Dam safety
Mal-adapted design
Financial losses
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