Energy Firms Accused of Ignoring Climate Change Risks

Energy Firms Accused of Ignoring Climate Change Risks

Power lines CC licensed by Flickr user pfala

Energy firms the world over are increasingly aware of the threat posed to their business by global warming, but few are actively preparing for the likely impact of rising temperatures and increasingly extreme weather.

That is the conclusion of a new report (PDF) from risk management consultancy Acclimatise, which assessed more than 200 responses from energy firms to the Carbon Disclosure Project and found that while more than 90 percent of respondents have some form of climate change strategy, just 6 percent have fully integrated adaptation measures into their long-term planning and governance.

The report revealed that awareness of the need to adapt to the likely impacts of climate change is increasingly widespread with about half of firms having measures in place to manage climate risks, but it warned that "adaptation actions are generally isolated and rarely form part of climate risk management strategies."

Energy utilities face considerable risks from climate change, ranging from the increased likelihood of power outages as a result of extreme weather events, to the impact of water shortages on nuclear and fossil fuel based power plants.

There are also growing signs that they could face increased legislative risks with the UK Climate Change Act giving the government the power to demand that energy firms report on their climate change risks and the Environment Agency signaling recently that nuclear power plants built near the coast could be forced to bolster their sea defenses to combat rising sea levels.

Speaking to BusinessGreen.com, Acclimatise chief executive John Firth said that energy firms failure to draw up detailed climate adaptation plans were understandable.

"The main focus from both the government and the science community has been on the need to reduce emissions," he said. "Many businesses have focused on that and lost sight of the fact that the climate is changing and will continue to change."

However, he warned that those businesses that failed to properly assess their climate change risks could face considerable disruption over the coming decades.

"You really have to look at every aspect of the businesses from raw materials, through to the supply chain, yours assets and your customers," he said. "You need to ask what will happen under different climate conditions and how your assets will change."

Graham Butler, utilities sector lead for IBM Global Business Services in the U.K. and Ireland, which commissioned the report, said that those firms that do put in place adaptation strategies now are likely to enjoy a competitive edge over their rivals.

"Risk management and adaptation planning are crucial to business success as climate change is directly affecting the generation, transmission and consumption of electricity," he said. "The smart electricity company of the future needs to have a fully integrated approach to building resilience."

This article originally appeared at BusinessGreen.com.

Image CC licensed by Flickr user pfala.