Climate change has often been discussed in terms that make likely impacts sound as if they belong only to a distant future. This has made implications hard to grasp and – for too many policy-makers and business leaders – made accepting and addressing what may happen to the planet and to people later this century an issue they can avoid and leave to their successors. No longer. Businesses – especially energy companies – must make more, and faster progress transitioning to a zero-carbon energy system.
The Immediate Climate Challenge
Climate impacts are not so distant. From coral bleaching, to forest fires, to more intense storms, to drought, we are living more and more climate impacts now. Recent publications and events have cemented this realisation.
As most Radar readers will know, in late 2018, the IPCC Special Report on Global Warming of 1.5°C identified that, if greenhouse gas emissions continue at their current rate, we are likely to reach 1.5°C of warming in the next 11-33 years and 4°C of warming by the beginning of 2100. That’s a kind of technical and dry sentence (maybe the IPCC needs an agent and/or an editor to make what it communicates more sensational?), but it needs to be read with alarm. This shortened timeline to 1.5°C is especially pertinent given that many countries are not on track to reach the goals they have set in line with the Paris Agreement target of 2°C of warming.
The tone of discourse is beginning to change, and none too soon. In his 2017 New York Magazine article, The Uninhabitable Earth (which was just expanded and published as a book in February of this year), David Wallace-Wells describes in jarring terms the imminent impacts of climate change. Wallace-Wells looks at recent data that foretells and details just how uncomfortable our climate-altered world will become, for example: heat index registered temperatures as high as 163°F in 2015 across the Middle East and Persian Gulf suggesting much of that region will become unliveable outside for humans; four separate starvation events in Africa and the Middle East in 2017, which the author predicts will be more common and more devastating in the future; and air quality so poor in China in 2013 that, at 800 AQI, it topped the Index maximum of 500 which warns of “serious risk of respiratory effects” for adults and recommends “everyone should avoid all outdoor exertion,” a circumstance Wallace-Wells believes will become widespread. Some find it hyperbolic, but Wallace-Wells considers himself an optimist, and says he only wants to paint such a bleak picture in order to make it compelling enough to get people to act.
The youth who will have to live on The Uninhabitable Earth are finding and raising their voices in unprecedented ways.
And some are acting now. The youth who will have to live on The Uninhabitable Earth are finding and raising their voices in unprecedented ways. Inspired by Greta Thunberg, on March 15th of this year, young people across the globe (including my children here in California) walked out of school to join a Youth Climate Strike and demand that global leaders take action on climate change now, not when it is too late for them and their futures. They plan to walk out again May 3rd, and we should all join them in advocating and delivering a better world for them than Wallace-Wells warns is likely.
Energy Sector Acts
Realistic progress towards stabilising at 1.5°C of warming and reaching the Paris Agreement goals requires an accelerated transition to clean energy over the next 12 years. The IPCC has identified the need for rapid and far reaching transitions in energy, land, urban infrastructure and industrial systems including: cutting carbon pollution by 45% by 2030 (compared to 2010 levels); and achieving zero carbon pollution by 2050.
Specific to the energy sector, the report states that renewable energy will need to supply 70-85% of electricity in 2050. All players in the energy system have roles to play, including and perhaps especially energy producers and utility companies. In BP’s most recent Energy Outlook, the company describes the future of the global energy transition, estimating that renewable energy will become the largest source of power by 2040; if BP is right, that will be too slow.
Some energy companies are taking action to achieve a lower carbon future by setting science-based targets. Orsted, who SustainAbility interviewed for another article in this issue, has committed to reduce its greenhouse gas emissions intensity from energy production by 96% by 2023 (from 2006 baseline). Royal Dutch Shell is the first major energy company to link executive compensation with its short-term carbon emissions targets. Among utilities, NRG Energy has committed to a 50% reduction in absolute greenhouse gas emissions by 2030 (from 2014 baseline) and to a long-term target of reducing 90% of absolute greenhouse gas emissions by 2050 (from 2014 levels). Xcel and Duke Energy are also taking action. In December 2018, Xcel announced that it would hit an 80% reduction of carbon emissions by 2030 and eliminate all carbon emissions from its power plants by 2050. Duke Energy has undertaken the task of meeting demand and helping to create demand from customers. The company operates a $62 million rebate program for residential, commercial, and nonprofit customers in North Carolina and has a dedicated employee responsible for managing relationships with corporate renewable energy buyers.
The next step for business is to scale up current activities and improve disclosure with external parties.
Task Force on Climate-related Financial Disclosures
The progress made thus far is not enough. The BP Energy Outlook projects that improved living standards will cause global energy demand to increase by ~30% by 2040. The next step for business is to scale up current activities and improve disclosure with external parties.
Shell’s Sky scenario lays out a set of actions from now to 2070 for substantially reducing carbon emissions. These include: changing consumer mindsets to prefer low carbon, high efficiency energy sources; global governments adopting carbon pricing mechanisms during the 2020s to meaningfully account for the cost of carbon dioxide embedded in consumer goods and services; tripling the rate of electrification of final energy; building and operating over 10,000 carbon capture and storage facilities; and achieving net-zero deforestation and the reforestation of an area the size of Brazil.
There is action in the finance sector too. Investors increasingly see climate change as a risk to business and are demanding that companies disclose their strategies for addressing climate risk. And the Task Force on Climate-Related Disclosures (TCFD) is helping companies understand which disclosures financial markets want to see in order to measure and respond to climate change risks. As in earlier waves of the sustainability movement, transparency has a key role to play, as it is essential to building trust and therefore to collaboration, as well as to satisfying investors and markets, which is why TCFD early adopters like Royal Dutch Shell and Suncor have embraced these new demands.
Consequences of Failure
There is so much at stake — everything, really. If we are honest, we know that stabilizing at 1.5°C is likely out of reach. The IPCC says the social and environmental consequences of this will include the loss of more than 50% of habitat range for 18% of insects, 16% of plants and 8% of vertebrates; increased exposure of small islands, coastal areas and deltas to impacts of sea level rise including greater saltwater intrusion, flooding and damage to infrastructure; and at least one summer per decade in which the Arctic Ocean has no sea ice. Additionally, without immediate significant emissions reductions, by 2080, southern Europe is expected to experience permanent extreme drought, much worse than the American dust bowl of the 1930s; at 4°C of warming the deadly European heat wave of 2003, which killed up to 2,000 people per day, will be a normal summer; as temperatures increase and more ozone forms, Americans are likely to experience a 70% increase in unhealthy ozone smog; and by 2050 the U.S. Forest Service estimates that wildfires will be twice as destructive as they are today, with the area burned growing fivefold in some places.
Along with government and other leaders, businesses must make more and faster progress transitioning to a zero-carbon energy system
Uninhabitable Earth? At least for a time, it will be extremely uncomfortable. But whether it is inhabitable and decent for the greatest number of people — not to mention natural systems and biodiversity — over the medium and long term is in our control. Along with government and other leaders, businesses must make more and faster progress transitioning to a zero-carbon energy system, and, as we explore in this issue of Radar, the energy and power sectors have unique roles to play.