Top 7 Energy-Related Takeaways from Risky Business Climate Change Report
On June 26, a bi-partisan group consisting of politicians, investors, and several former Treasury Secretaries released the “Risky Business” report, an economic risk analysis of climate change extrapolations. While the report focuses specifically on the major regions in the U.S., it covers a lot of territory from agriculture, to business, and of course, the energy sector.
Here are the top 7 energy-related takeaways from the report, organized by region.
- Sea level rise will threaten energy infrastructure along the Northeastern seaboard. In Northeastern U.S., rising sea levels will directly impact the energy infrastructure currently in place. According to the report, roughly 88 percent of the region’s population resides along the coast and 68 percent of the region’s GDP is generated in these counties. Also, if the U.S. is to continue on the path projected in the report, damages from hurricanes and other coastal disasters can potentially total in the billions. Combine this with increased heat, and you have a perfect storm for a strained and insufficient energy infrastructure.
- While the sea level rising is a factor in the Southeast, the biggest problem is the heat. Since several of the major cities in the Southeastern region of the U.S. are coastal, sea level rise will also threaten a large portion of the energy infrastructure. The report makes the startling claim that there is a “1-in-20 chance that more than $346 billion in current Florida property will be underwater by the end of this century, and a 1-in-100 chance that more than $681 billion in property will be below mean sea levels.” They also note that “an additional $240 billion in property will likely be at risk during high tide that is not at risk today.” And while that’s already a major concern, the biggest concern for this region’s energy infrastructure is the projected dramatic increase in temperature. For this region, the report claims “if we continue on our current emissions path, the average Southeast resident will likely experience an additional 17 to 52 extremely hot days per year by mid-century and an additional 48 to 130 days per year by the end of the century.” This, of course, means more energy infrastructure will be needed, though there may not be the land available and current infrastructure may fall victim to rising tides. On top of all of that, the projections show there could be a 3.2 percent decrease in labor across high-risk sectors, of which energy is one.
- Current emission trends in the Midwest could lead to deadly combination of heat and humidity. The Midwestern U.S. is dominated by agriculture and the industry would be gravely affected by rising temperatures. The biggest threat, however, is the dangerous combination of heat and unprecedented humidity. If “business as usual” continues with regards to emissions, by 2200, there will be an estimated 30 to 45 days per year where it is unsafe to be outside based on the humid heat stroke index (HHSI). As the report points out, farmers are known for their adaptability and could probably keep the operations stable, though it could potentially mean an exodus from the region to more welcoming climes. Since agriculture is so closely tied to energy—as well as other major industries in the region—its departure from the Midwest would mean big ripple effects to other related sectors.
- Effects on will be varied across energy-rich Great Plains region. The largest of the report’s regions, the Great Plains region is defined as stretching from Montana to Texas, encompassing a wide swath of the country in between. However, one thing the states included in this region is their major production of the nation’s energy. The report notes that “Texas and Wyoming alone produce half of U.S. energy (primarily from crude oil and natural gas in Texas and coal in Wyoming), and North Dakota has recently become a major oil and gas producer.” Also, “power generation facilities in the region currently meet about 17% of the nation’s overall electricity needs.” Energy is big business in the Great Plains, and it could soon be extremely strained with demand on track to greatly outpace supply, especially in electricity. The report predicts that in the immediate future (5 to 25 years from now) national power consumption is likely to increase between .8 and 2.2 percent. The Great Plains region is expected to consume far more than that, however, with a projected increase of 8.4 percent for the same time frame. The report suggests that to meet the demands of the region, “construction of up to 95 GW of additional power generation capacity over the next 5 to 25 years, the rough equivalent of 200 average-size coal or natural gas power plants” will be necessary. This will dramatically increase energy costs and shift the whole economy of the region. Construction of new plants may not be an option, though, as many of the region’s coastal facilities could also be directly affected by extreme weather and rising sea levels.
- In the Northwest, change will be less dramatic. The report points to the Northwest as an example of how climate change will be felt differently around the nation. In the report’s analysis, they suggest the major impact will be felt on the region’s forests, with temperature increases leading to a higher risk of wildfires. Sea level rise will also be more varied here than the rest of the regions because of the Alaskan glaciers. Near future predictions show a sea level decrease, while projections a hundred years out show a potential increase. The energy sector here is stable, and despite increasing temperatures, looks as if it will stay that way. Still, the ripple effects of potentially wildfire danger could be felt.
- The Southwest’s biggest problem is drought, and rising sea levels and increased heat aren’t helping. As the report notes, this region includes California, which automatically lumps in a massive coastline. For this region, the biggest concern is drought. Future projections show things only getting worse as water begins to dry up as temperatures increase. Also, sea level rise is another major factor. For the energy sector here, these are major concerns as supply could outpace demand and the ripple effects of the drought will be felt. Air conditioning is heavily reliant on water supply, and if there isn’t any to go around, the problem will only be exacerbated. While this is all certainly troubling, the report notes the region is “ripe for further analysis.”
- Alaska and Hawaii’s energy sectors are in difficult positions as climate changes. The report separates Alaska and Hawaii from the rest of the U.S., though they have their own share of potential problems. The report hails Alaska as “ground zero for U.S. climate impacts” as 80 percent of its GDP comes from oil and gas production. As energy demand increases across the U.S., Alaska’s energy sector will be heavily impacted. While Alaska produces much of the nation’s energy, Hawaii imports almost all of theirs. Nearly across the board, energy demand will increase greatly and this means rising energy costs. For Hawaii, this is especially difficult since importing energy is already costly. The state is attempting to invest in renewable sources on the islands, but this is proving difficult as the area needed for these ventures are along coastlines that would suffer greatly from rising sea levels.
Carbon dioxide removal revenues worth £2bn a year by 2030
Carbon dioxide removal revenues could reach £2bn a year by 2030 in the UK with costs per megatonne totalling up to £400 million, according to the National Infrastructure Commission.
Engineered greenhouse gas removals will become "a major new infrastructure sector" in the coming decades - although costs are uncertain given removal technologies are in their infancy - and revenues could match that of the UK’s water sector by 2050. The Commission’s analysis suggests engineered removals technologies need to have capacity to remove five to ten megatonnes of carbon dioxide no later than 2030, and between 40 and 100 megatonnes by 2050.
The Commission states technologies fit into two categories: extracting carbon dioxide directly out of the air; and bioenergy with carbon capture technology – processing biomass to recapture carbon dioxide absorbed as the fuel grew. In both cases, the captured CO2 is then stored permanently out of the atmosphere, typically under the seabed.
The report sets out how the engineered removal and storage of carbon dioxide offers the most realistic way to mitigate the final slice of emissions expected to remain by the 2040s from sources that don’t currently have a decarbonisation solution, like aviation and agriculture.
It stresses that the potential of these technologies is “not an excuse to delay necessary action elsewhere” and cannot replace efforts to reduce emissions from sectors like road transport or power, where removals would be a more expensive alternative.
The critical role these technologies will play in meeting climate targets means government must rapidly kick start the sector so that it becomes viable by the 2030s, according to the report, which was commissioned by government in November 2020.
Early movement by the UK to develop the expertise and capacity in greenhouse gas removal technologies could create a comparative advantage, with the prospect of other countries needing to procure the knowledge and skills the UK develops.
The Commission recommends that government should support the development of this new sector in the short term with policies that drive delivery of these technologies and create demand through obligations on polluting industries, which will over time enable a competitive market to develop. Robust independent regulation must also be put in place from the start to help build public and investor confidence.
While the burden of these costs could be shared by different parts of industries required to pay for removals or in part shared with government, the report acknowledges that, over the longer term, the aim should be to have polluting sectors pay for removals they need to reach carbon targets.
Polluting industries are likely to pass a proportion of the costs onto consumers. While those with bigger household expenditures will pay more than those on lower incomes, the report underlines that government will need to identify ways of protecting vulnerable consumers and to decide where in relevant industry supply chains the costs should fall.
Chair of the National Infrastructure Commission, Sir John Armitt, said taking steps to clean our air is something we’re going to have to get used to, just as we already manage our wastewater and household refuse.
"While engineered removals will not be everyone’s favourite device in the toolkit, they are there for the hardest jobs. And in the overall project of mitigating our impact on the planet for the sake of generations to come, we need every tool we can find," he said.
“But to get close to having the sector operating where and when we need it to, the government needs to get ahead of the game now. The adaptive approach to market building we recommend will create the best environment for emerging technologies to develop quickly and show their worth, avoiding the need for government to pick winners. We know from the dramatic fall in the cost of renewables that this approach works and we must apply the lessons learned to this novel, but necessary, technology.”
The Intergovernmental Panel on Climate Change and International Energy Agency estimate a global capacity for engineered removals of 2,000 to 16,000 megatonnes of carbon dioxide each year by 2050 will be needed in order to meet global reduction targets.
Yesterday Summit Carbon Solutions received "a strategic investment" from John Deere to advance a major CCUS project (click here). The project will accelerate decarbonisation efforts across the agriculture industry by enabling the production of low carbon ethanol, resulting in the production of more sustainable food, feed, and fuel. Summit Carbon Solutions has partnered with 31 biorefineries across the Midwest United States to capture and permanently sequester their CO2 emissions.
Cory Reed, President, Agriculture & Turf Division of John Deere, said: "Carbon neutral ethanol would have a positive impact on the environment and bolster the long-term sustainability of the agriculture industry. The work Summit Carbon Solutions is doing will be critical in delivering on these goals."
McKinsey highlights a number of CCUS methods which can drive CO2 to net zero:
- Today’s leader: Enhanced oil recovery Among CO2 uses by industry, enhanced oil recovery leads the field. It accounts for around 90 percent of all CO2 usage today
- Cementing in CO2 for the ages New processes could lock up CO2 permanently in concrete, “storing” CO2 in buildings, sidewalks, or anywhere else concrete is used
- Carbon neutral fuel for jets Technically, CO2 could be used to create virtually any type of fuel. Through a chemical reaction, CO2 captured from industry can be combined with hydrogen to create synthetic gasoline, jet fuel, and diesel
- Capturing CO2 from ambient air - anywhere Direct air capture (DAC) could push CO2 emissions into negative territory in a big way
- The biomass-energy cycle: CO2 neutral or even negative Bioenergy with carbon capture and storage relies on nature to remove CO2 from the atmosphere for use elsewhere