The global energy crisis prompted by Russia’s invasion of Ukraine is a stark reminder of the importance of energy security. But there are many other threats to energy security, both old and new. These include climate change, which is already affecting the supply of fuels, minerals and electricity, as well as threatening the physical resilience of energy infrastructure. It is also altering energy demand for buildings, industry and transport. While these impacts vary significantly from country to country, no continent is immune to the consequences of climate change. In November 2022, the United Nations COP27 Climate Change Conference in Egypt will work to strengthen global co-operation and collective action to tackle climate change. The focus will be just as much on adapting to the inevitable consequences of a warming planet as on how to accelerate mitigation to ensure that these consequences remain as manageable as possible.
Energy systems need to be resilient to be secure Against the increasing impacts of climate change, resilient energy systems will bring more benefits than costs. A climate-resilient energy system that can anticipate, absorb, accommodate and recover from climate hazards, could prevent negative effects of climate change from spreading across the energy value chain. A climate-resilient energy system can prepare for changes in climate (readiness), adapt to and withstand the slow-onset changes in climate patterns (robustness), continue to operate under the immediate shocks from extreme weather events (resourcefulness) and restore the system’s function after climate-driven disruptions (recovery). A cost-benefit analysis in this report finds that the net benefits of investing in resilience against floods in the power sector in Africa and Asia could reach almost USD 1 trillion to 2050, even in a low-emissions scenario. The return of investment in flood walls, advanced riprap, improved dike construction and extreme event flood design could be three to eight times higher than costs in Asia, and 11 to 15 times higher in Africa, depending on the scenario.
Climate change is posing significant challenges to the resilience of energy systems across the world, increasing uncertainties as to the reliable supply of fuels and resources and raising the likelihood of climate-driven disruptions. The world has seen major disruptions in the energy sector due to climate change in 2022. Heatwaves in Europe raised electricity prices to a record-breaking level, with soaring energy demand for cooling. The Category 4 Hurricane Ian destroyed electricity networks in the United States and Cuba, leaving over 13 million people in the dark for hours to weeks. Massive floods from record monsoon rains and glacial melt in Pakistan damaged power stations and gas pipelines. Severe droughts in Chile and flooding in South Africa disrupted the global supply of copper and cobalt, critical minerals for energy systems.
Extreme precipitation events will continue to increase, leading to more floods and droughts Globally, today’s world is 30% more likely to experience a heavy precipitation event than it was in the pre-industrial period, and the event is on average 7% more intense. Heavy precipitation and associated flooding have become an increasing risk in several parts of the world, including in central and northern Europe, central and western North America and large parts of Asia. Nearly all IEA member and association countries (88%) have a medium or high level of flood risks. In Europe, an increasing share of annual precipitation has occurred during heavy rainfalls, leading to floods that have caused over 5 000 fatalities and cost more than EUR 20 billion between 1980 and 2020. In 2021, Europe experienced one of its most severe flooding events on record, with western Germany and eastern Belgium particularly affected.
Fuels and critical minerals Climate change impacts can affect the extraction, processing and transport of fuels and minerals essential to energy production and use, industry and agriculture. Temperature rise exacerbates the frequency and magnitude of wildfires that can damage oil and gas production and affect production sites in Arctic regions due to ice melting and permafrost thawing. Heatwaves could add stress to hydrogen liquefaction, which requires low temperatures, and to fuel pipelines, potentially leading to their expansion and increasing the risk of rupture. Precipitation-related hazards like floods and droughts are especially problematic for shale resources, coal mining, minerals extraction, biofuel production and river transport. Tropical cyclones, coupled with sea-level rise, could be a risk to coastal oil and gas production and transport facilities due to storm surge, coastal flooding and erosion.
Nuclear power Nuclear power is the second-largest source of low-carbon electricity today, providing 10% of electricity generation. In 2021, the global capacity of nuclear power was 413 GW, declining by almost 3 GW globally as newly completed reactors were not able to compensate for over 8 GW of retirements. If existing policies and trends are maintained (STEPS), nuclear capacity in 2050 could reach 590 GW. To achieve net zero emissions by 2050, nuclear capacity needs to grow towards 871GW, which requires annual capacity additions to be nearly four times their recent historical average. Nuclear power is extensively used as a baseload source of electricity in many countries. It generally runs at close to a maximum capacity factor continuously and is comparatively resilient to extreme weather events thanks to high safety measures. In the United States, nuclear power plants produce maximum power more than 93% of the time during the year, demonstrating their resilience against extreme weather conditions. For instance, when Hurricane Harvey devastated Texas in 2017, two nearby nuclear reactors of 2.7 GW operated at full capacity, while there were wild fluctuations in electricity generation from other sources. According to the OECD-NEA, in 2004-2013, weather-related outages represent a loss of only 0.17% of total electricity production.
Cooling Rising temperatures increase electricity demand for cooling, placing major strains on electricity systems Climate change, along with other factors, such as population and GDP growth, has direct impacts on energy demand in the buildings sector. Rising temperatures lead to an increase in cooling degree days (CDD) and a decrease in heating degree days (HDD).29 In a high-emissions scenario (SSP5-8.5), CDD is projected to increase by 732 degree days in 2081-2100, compared to 1850-1900. Even in a low-emissions scenario (SSP1-2.6), it is estimated to increase by 268 degree days. The notable growth in cooling demand will lead to an overall increase in global energy demand, offsetting a decrease in heating demand.
The VSL is the commonly used indicator in a CBA to monetise avoided fatalities, in our case due to more investments preventing power outages. The VSL is an estimate of the economic value society places on reducing the average number of statistical fatalities by one and is of common use in the analysis of projects that affect mortality risks. It should be understood as an evaluation of the additional cost individuals would be willing to bear for improvements in safety, i.e. reducing their fatality risk. The standard valuation of this indicator is computed via surveys estimating individuals’ willingness to pay in specific situations (e.g. the investment project making roads safer). Due to the subjectivity of this valuation, the VSL can vary widely across regions and sectors.
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