659
10
Key Economic Sectors
and Services
Coordinating Lead Authors:
Douglas J. Arent (USA), Richard S.J. Tol (UK)
Lead Authors:
Eberhard Faust (Germany), Joseph P. Hella (Tanzania), Surender Kumar (India),
Kenneth M. Strzepek (UNU/USA), Ferenc L. Tóth (IAEA/Hungary), Denghua Yan (China)
Contributing Authors:
Francesco Bosello (Italy), Paul Chinowsky (USA), Kristie L. Ebi (USA), Stephane Hallegatte
(France), Robert Kopp (USA), Simone Ruiz Fernandez (Germany), Armin Sandhoevel
(Germany), Philip Ward (Netherlands), Eric Williams (IAEA/USA)
Review Editors:
Amjad Abdulla (Maldives), Haroon Kheshgi (USA), He Xu (China)
Volunteer Chapter Scientist:
Julius Ngeh (Cameroon)
This chapter should be cited as:
Arent
, D.J., R.S.J. Tol, E. Faust, J.P. Hella, S. Kumar, K.M. Strzepek, F.L. Tóth, and D. Yan, 2014: Key economic
sectors and services. In: Climate Change 2014: Impacts, Adaptation, and Vulnerability. Part A: Global and
Sectoral Aspects. Contribution of Working Group II to the Fifth Assessment Report of the Intergovernmental
Panel on Climate Change [Field, C.B., V.R. Barros, D.J. Dokken, K.J. Mach, M.D. Mastrandrea, T.E. Bilir,
M. Chatterjee, K.L. Ebi, Y.O. Estrada, R.C. Genova, B. Girma, E.S. Kissel, A.N. Levy, S. MacCracken,
P.R. Mastrandrea, and L.L. White (eds.)]. Cambridge University Press, Cambridge, United Kingdom
and New York, NY, USA, pp. 659-708.
10
660
Executive Summary............................................................................................................................................................ 662
10.1. Introduction and Context ....................................................................................................................................... 664
10.2. Energy ..................................................................................................................................................................... 664
10.2.1. Energy Demand ................................................................................................................................................................................ 664
10.2.2. Energy Supply ................................................................................................................................................................................... 665
10.2.3. Transport and Transmission of Energy ............................................................................................................................................... 668
10.2.4. Macroeconomic Impacts ................................................................................................................................................................... 669
10.2.5. Summary .......................................................................................................................................................................................... 672
10.3. Water Services ........................................................................................................................................................ 672
10.3.1. Water Infrastructure and Economy-Wide Impacts ............................................................................................................................. 672
10.3.2. Municipal and Industrial Water Supply ............................................................................................................................................. 673
10.3.3. Wastewater and Urban Stormwater ................................................................................................................................................. 673
10.3.4. Inland Navigation ............................................................................................................................................................................. 673
10.3.5. Irrigation ........................................................................................................................................................................................... 673
10.3.6. Nature Conservation ......................................................................................................................................................................... 674
10.3.7. Recreation and Tourism .................................................................................................................................................................... 674
10.3.8. Water Management and Allocation .................................................................................................................................................. 674
10.3.9. Summary .......................................................................................................................................................................................... 674
10.4. Transport ................................................................................................................................................................. 674
10.4.1. Roads ................................................................................................................................................................................................ 674
10.4.2. Rail ................................................................................................................................................................................................... 675
10.4.3. Pipeline ............................................................................................................................................................................................. 675
10.4.4. Shipping ........................................................................................................................................................................................... 675
10.4.5. Air ..................................................................................................................................................................................................... 676
10.5. Other Primary and Secondary Economic Activities ................................................................................................. 676
10.5.1. Primary Economic Activities .............................................................................................................................................................. 676
10.5.1.1. Crop and Animal Production ............................................................................................................................................. 676
10.5.1.2. Forestry and Logging ......................................................................................................................................................... 676
10.5.1.3. Fisheries and Aquaculture ................................................................................................................................................. 676
10.5.1.4. Mining and Quarrying ....................................................................................................................................................... 676
10.5.2. Secondary Economic Activities .......................................................................................................................................................... 677
10.5.2.1. Manufacturing ................................................................................................................................................................... 677
10.5.2.2. Construction and Housing ................................................................................................................................................. 677
Table of Contents
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Key Economic Sectors and Services Chapter 10
10
10.6. Recreation and Tourism .......................................................................................................................................... 677
10.6.1. Recreation and Tourism Demand ...................................................................................................................................................... 677
10.6.1.1. Recreation ......................................................................................................................................................................... 677
10.6.1.2. Tourism .............................................................................................................................................................................. 678
10.6.2. Recreation and Tourism Supply ......................................................................................................................................................... 679
10.6.3. Market Impacts ................................................................................................................................................................................. 679
10.7. Insurance and Financial Services ............................................................................................................................ 680
10.7.1. Main Results of the Fourth Assessment Report and IPCC Special Report on Managing the Risks of Extreme Events
and Disasters to Advance Climate Change Adaptation on Insurance ................................................................................................ 680
10.7.2. Fundamentals of Insurance Covering Weather Hazards .................................................................................................................... 680
10.7.3. Observed and Projected Insured Losses from Weather Hazards ........................................................................................................ 680
10.7.4. Fundamental Supply-Side Challenges and Sensitivities .................................................................................................................... 683
10.7.5. Products and Systems Responding to Changes in Weather Risks ..................................................................................................... 684
10.7.6. Governance, Public-Private Partnerships, and Insurance Market Regulation ..................................................................................... 686
10.7.7. Financial Services .............................................................................................................................................................................. 686
10.7.8. Summary .......................................................................................................................................................................................... 687
10.8. Services Other than Tourism and Insurance ............................................................................................................ 687
10.8.1. Sectors Other than Health ................................................................................................................................................................ 687
10.8.2. Health ............................................................................................................................................................................................... 687
10.9. Impacts on Markets and Development ................................................................................................................... 689
10.9.1. Effects of Markets ............................................................................................................................................................................. 689
10.9.2. Aggregate Impacts ........................................................................................................................................................................... 690
10.9.3. Social Cost of Carbon ....................................................................................................................................................................... 690
10.9.4. Effects on Growth ............................................................................................................................................................................. 691
10.9.4.1. The Rate of Economic Growth ........................................................................................................................................... 691
10.9.4.2. Poverty Traps ..................................................................................................................................................................... 692
10.9.5. Summary .......................................................................................................................................................................................... 692
10.10. Summary; Research Needs and Priorities .............................................................................................................. 693
References ......................................................................................................................................................................... 694
Frequently Asked Questions
10.1: Why are key economic sectors vulnerable to climate change? ......................................................................................................... 664
10.2: How does climate change impact insurance and financial services? ................................................................................................ 680
10.3: Are other economic sectors vulnerable to climate change too? ....................................................................................................... 688
662
Chapter 10 Key Economic Sectors and Services
10
Executive Summary
This chapter assesses the implications of climate change on economic activity in key economic sectors and services, on economic welfare, and
on economic development.
For most economic sectors, the impact of climate change will be small relative to the impacts of other drivers (medium evidence,
high agreement). Changes in population, age, income, technology, relative prices, lifestyle, regulation, governance, and many other aspects of
socioeconomic development will have an impact on the supply and demand of economic goods and services that is large relative to the impact
of climate change. {10.10}
Climate change will reduce energy demand for heating and increase energy demand for cooling in the residential and commercial
sectors (robust evidence, high agreement); the balance of the two depends on the geographic, socioeconomic, and technological conditions.
Increasing income will allow people to regulate indoor temperatures to a comfort level that leads to fast growing energy demand for air
conditioning even in the absence of climate change in warm regions with low income levels at present. Energy demand will be influenced by
changes in demographics (upward by increasing population and decreasing average household size), lifestyles (upward by larger floor area of
dwellings), the design and heat insulation properties of the housing stock, the energy efficiency of heating/cooling devices, and the abundance
and energy efficiency of other electric household appliances. The relative importance of these drivers varies across regions and will change over
time. {10.2}
Climate change will affect different energy sources and technologies differently, depending on the resources (water flow, wind,
insolation), the technological processes (cooling), or the locations (coastal regions, floodplains) involved (robust evidence, high
agreement).
Gradual changes in various climate attributes (temperature, precipitation, windiness, cloudiness, etc.) and possible changes in the
frequency and intensity of extreme weather events will progressively affect operation over time. Climate-induced changes in the availability
and temperature of water for cooling are the main concern for thermal and nuclear power plants. Several options are available to cope with
reduced water availability but at higher cost; however, decreased efficiency of thermal conversion remains a primary concern. Similarly, already
available or newly developed technological solutions allow firms to reduce the vulnerability of new structures and enhance the climate suitability
of existing energy installations. {10.2}
Climate change may influence the integrity and reliability of pipelines and electricity grids (medium evidence, medium agreement).
Pipelines and electric transmission lines have been designed and operated for more than a century in diverse and often extreme climatic conditions
on land from hot deserts to permafrost areas and increasingly at sea. Owing to the private nature and high economic value to the energy sector,
they have been designed to higher tolerance levels than most transportation infrastructure. Climate change may require changes in design
standards for the construction and operation of pipelines and power transmission and distribution lines. Adopting existing technology from
other geographical and climatic conditions may reduce the cost of adapting new infrastructure as well as the cost of retrofitting existing
pipelines and grids to the changing climate, sea level, and weather conditions, which is likely to become more intense over time. {10.2}
Climate change will have impacts, positive and negative and varying in scale and intensity, on water supply infrastructure and
water demand (robust evidence, high agreement), but the economic implications are not well understood.
Economic impacts
include flooding, scarcity, and cross-sectoral competition. Flooding can have major economic costs, both in term of impacts (capital destruction,
disruption) and adaptation (construction, defensive investment). Water scarcity and competition for water—driven by institutional, economic,
or social factors—may mean that water is not available in sufficient quantity or quality for some uses or locations. {10.3}
Climate change may negatively affect transport infrastructure (limited evidence, high agreement). Transport infrastructure
malfunctions if the weather is outside the design range, which would happen more frequently as the climate continues to change. All
infrastructure is vulnerable to freeze-thaw cycles. Paved roads are particularly vulnerable to temperature extremes, and unpaved roads and
bridges to precipitation extremes. Transport infrastructure on ice or permafrost is especially vulnerable. {10.4}
663
10
Key Economic Sectors and Services Chapter 10
Climate change will affect tourism resorts, particularly ski resorts, beach resorts, and nature resorts (robust evidence, high
agreement) and tourists may spend their holidays at higher altitudes and latitudes (medium evidence, high agreement).
The
economic implications of climate change-induced changes in tourism demand and supply entail gains for countries closer to the poles and
higher up the mountains and losses for other countries. The demand for outdoor recreation is affected by weather and climate, and impacts will
vary geographically and seasonally. {10.6}
Climate change will affect insurance systems (robust evidence, high agreement). More frequent and/or intensive weather disasters as
projected for some regions/hazards will increase losses and loss variability in various regions and challenge insurance systems to offer affordable
coverage while raising more risk-based capital, particularly in low- and middle-income countries. Economic-vulnerability reduction through
insurance has proven effective. Large-scale public-private risk prevention initiatives and government insurance of the non-diversifiable portion
of risk offer example mechanisms for adaptation. Commercial reinsurance and risk-linked securitization markets also have a role in ensuring
financially resilient insurance and risk transfer systems. {10.7}
Climate change will affect the health sector (medium evidence, high agreement) through increases in the frequency, intensity, and
extent of extreme weather events as well as increasing demands for health care services and facilities, including public health programs,
disease prevention activities, health care personnel, infrastructure, and supplies related to treatment of infectious diseases and temperature-
related events. {10.8}
Well-functioning markets provide an additional mechanism for adaptation and thus tend to reduce negative impacts and
increase positive ones for any specific sector or country (medium evidence, high agreement). The impacts of climate on one sector of
the economy of one country in turn affect other sectors and other countries though product and input markets. Markets increase overall welfare,
but not necessarily welfare in every sector and country. {10.9}
The impacts of climate change may decrease productivity and economic growth, but the magnitude of this effect is not well
understood (limited evidence, high agreement). Climate could be one of the causes why some countries are trapped in poverty, and
climate change may make it harder to escape poverty. {10.9}
Global economic impacts from climate change are difficult to estimate. Economic impact estimates completed over the past 20 years
vary in their coverage of subsets of economic sectors and depend on a large number of assumptions, many of which are disputable, and many
estimates do not account for catastrophic changes, tipping points, and many other factors. With these recognized limitations, the incomplete
estimates of global annual economic losses for additional temperature increases of ~2°C are between 0.2 and 2.0% of income (±1 standard
deviation around the mean) (medium evidence, medium agreement). Losses are more likely than not to be greater, rather than smaller, than
this range (limited evidence, high agreement). Additionally, there are large differences between and within countries. Losses accelerate with
greater warming (limited evidence, high agreement), but few quantitative estimates have been completed for additional warming around 3°C
or above. Estimates of the incremental economic impact of emitting carbon dioxide lie between a few dollars and several hundreds of dollars
per tonne of carbon (robust evidence, medium agreement). Estimates vary strongly with the assumed damage function and discount rate.
{10.9}
Not all key economic sectors and services have been subject to detailed research. Few studies have evaluated the possible impacts of
climate change on mining, manufacturing, or services (apart from health, insurance, and tourism). Further research, collection, and access to
more detailed economic data and the advancement of analytic methods and tools will be required to assess further the potential impacts of
climate on key economic systems and sectors. {10.5, 10.8, 10.10}
664
Chapter 10 Key Economic Sectors and Services
10
10.1. Introduction and Context
This chapter discusses the implications of climate change on key economic
sectors and services, for example, economic activity. Other chapters discuss
i
mpacts from a physical, chemical, biological, or social perspective.
Economic impacts cannot be isolated; therefore, there are a large
number of cross-references to sections in other chapters of this report.
In some cases, particularly agriculture, the discussion of the economic
impacts is integrated with the other impacts.
Focusing on the potential impact of climate change on economic activity,
this chapter addresses questions such as: How does climate change
affect the demand for a particular good or service? What is the impact
on its supply? How do supply and demand interact in the market? What
are the effects on producers and consumers? What is the effect on the
overall economy, and on welfare?
An inclusive approach was taken, discussing all sectors of the economy.
Section SM10.1 found in this chapter’s on-line supplementary material
shows the list of sectors according to the International Standard Industrial
Classification. This assessment reflects the breadth and depth of the
state of knowledge across these sectors; many of which have not been
evaluated in the literature. We extensively discuss five sectors: energy
(Section 10.2), water (Section 10.3), transport (Section 10.4), tourism
(Section 10.6), and insurance (Section 10.7). Other primary and secondary
sectors are discussed in Section 10.5, and Section 10.8 is devoted to
other service sectors. Food and agriculture is addressed in Chapter 7.
Sections 10.2 through 10.8 discuss individual sectors in isolation. Markets
are connected, however. Section 10.9 therefore assesses the implications
of changes in any one sector on the rest of the economy. It also discusses
the effect of the impacts of climate change on economic growth and
development. Chapter 19 assesses the impact of climate change on
economic welfare—that is, the sum of changes in consumer and
producer surplus, including for goods and services not traded within the
formal economy. This is not attempted here. The focus is on economic
activity. Section 10.10 discusses whether there may be vulnerable sectors
that have yet to be studied.
P
revious assessment reports by the IPCC did not have a chapter on “key
economic sectors and services.” Instead, the material assembled here
was spread over a number of chapters. The Fourth Assessment Report
(AR4) is referred to in the context of the sections below. In some cases,
however, the literature is so new that previous IPCC reports did not
discuss these impacts at any length.
10.2. Energy
Studies conducted since AR4 and assessed here confirm the main insights
about the impacts of climate change on energy demand as reported in
the Second Assessment Report (SAR; Acosta et al., 1995) and reinforced
by the Third Assessment Report (TAR; Scott et al., 2001) and AR4 (Wilbanks
et al., 2007): ceteris paribus, in a warming world, energy demand for
heating will decline and energy demand for cooling will increase; the
balance of the two depends on the geographic, socioeconomic, and
technological conditions. The relative importance of temperature changes
among the drivers of energy demand varies across regions and will
change over time. Earlier IPCC assessments did not write much about
energy supply, but an increasing number of studies now explore its
vulnerability, impacts, and adaptation options (Karl et al., 2009; Troccoli,
2010; Ebinger and Vergara, 2011). The energy sector will be transformed
by climate policy (WGIII AR5 Chapter 7) but impacts of climate changes
too will be important for secure and reliable energy supply.
10.2.1. Energy Demand
Most studies conducted since AR4 explore the impacts of climate
change on residential energy demand, particularly electricity (Mideksa
and Kallbekken, 2010). Some studies encompass the commercial sector
as well but very few deal with industry and agriculture. In addition to a
few global studies based on global energy or integrated assessment
models, the new studies tend to focus on specific countries or regions
(Zachariadis, 2010; Olonscheck et al., 2011), rely on improved methods
(more advanced statistical techniques; de Cian et al., 2013) and data (both
Frequently Asked Questions
FAQ 10.1 | Why are key economic sectors vulnerable to climate change?
Many key economic sectors are affected by long-term changes in temperature, precipitation, sea level rise, and
extreme events, all of which are impacts of climate change. For example, energy is used to keep buildings warm in
winter and cool in summer. Changes in temperature would thus affect energy demand. Climate change also affects
energy supply through the cooling of thermal plants, through wind, solar, and water resources for power, and
through transport and transmission infrastructure. Water demand increases with temperature but falls with rising
carbon dioxide (CO
2
) concentrations as CO
2
fertilization improves the water use efficiency plant respiration. Water
supply depends on precipitation patterns and temperature, and water infrastructure is vulnerable to extreme
weather, while transport infrastructure is designed to withstand a particular range of weather conditions, and climate
change would expose this infrastructure to weather outside historical design criteria. Recreation and tourism are
weather-dependent. As holidays are typically planned in advance, tourism depends on the expected weather and
will thus be affected by climate change. Health care systems are also impacted, as climate change affects a number
of diseases and thus the demand for and supply of health care.
665
10
Key Economic Sectors and Services Chapter 10
h
istorical and regional climate projections), and many of them explicitly
include non-climatic drivers of energy demand (e.g., sources). A few
studies consider changes in demand together with changes in climate-
dependent energy sources, such as hydropower (Hamlet et al., 2010).
Sorting the assessed studies according to the present climate (represented
by mean annual temperature based on 1971–2000 climatology) and
current income (represented by gross domestic product (GDP) per capita
in 2009), the general patterns are as follows. In countries and regions
with already high incomes, climate-related changes in energy demand
will be driven primarily by increasing temperatures. In countries/regions
with high incomes and warm climates, increasing temperatures will be
associated with heavier use of air conditioning. In countries/regions with
high incomes and temperate and cold climates, increasing temperatures
will result in lower demands for various energy forms (electricity, gas,
coal, oil). Increasing incomes will play a marginal role in these countries
and regions. In contrast, changes in income will be the main driver of
increasing demand for energy (mainly electricity for air conditioning
and transportation fuels) in present-day low-income countries in warm
climates. Neither indicator is ideal because country-level mean annual
temperatures for large countries can hide large regional differences and
average incomes may conceal large disparities, but they help cluster
the national and regional studies in the search for general finding.
At the global scale, energy demand for residential air conditioning in
summer is projected to increase rapidly in the 21st century under the
reference climate change scenario (medium population and economic
growth globally, but faster economic growth in developing countries;
no mitigation policies in addition to those in place in 2008) by the Targets
IMAGE Energy Regional Model/Integrated Model to Assess the Global
Environment (TIMER/IMAGE) model (Isaac and Van Vuuren, 2009). The
increase is from nearly 300 TWh in 2000 to about 4000 TWh in 2050
and more than 10,000 TWh in 2100, about 75% of which is due to
increasing income in emerging market countries and 25% is due to
climate change. Energy demand for heating in winter increases too,
but much less rapidly, since in most regions with the highest need for
heating, incomes are already high enough for people to heat their
homes to the desired comfort level (except in some poor households).
In these regions, energy demand for heating will decrease.
These general patterns and especially the quantitative results of the
projected shifts in energy and electricity demand can be modified by
many other factors. In addition to changes in temperatures and incomes,
the actual energy demand will be influenced by changes in demographics
(upward by increasing population and decreasing average household
size, mixed effects from urbanization), lifestyles (upward by larger floor
area of dwellings), building codes and regulations for the design and
insulation of the housing stock, the energy efficiency of heating/cooling
devices, the abundance and energy efficiency of other electric household
appliances, the price of energy, and so forth.
10.2.2. Energy Supply
Changes in climate attributes (temperature, precipitation, windiness,
cloudiness, etc.) will affect different energy sources and technologies
differently. Gradual climate change will progressively affect the operation
o
f energy installations and infrastructure over time. Possible changes
in the frequency and intensity of extreme weather events (EWEs) as a
result of climate change represent a different kind of hazard for them.
(EWEs are weather events that are rare at a particular place and time
of the year; they are usually defined as rare or rarer than the 10th and
90th percentiles of a probability density function estimated from
observations; see Glossary). Rummukainen (2013) and Mika (2013)
summarize recent trends and prospects relevant for the energy sector.
This section assesses the most important impacts and adaptation options
in both categories. Table 10-1 provides an overview.
Currently, thermal power plants provide about 80% of global electricity
and their share is projected to remain high in most mitigation scenarios
(IEA, 2010a). Thermal power plants can be designed to operate under
diverse climatic conditions, from the cold Arctic to the hot tropical regions
and are normally well adapted to the prevailing conditions. However,
they might face new challenges and will need to respond by hard
(design or structural methods) or soft (operating procedures) measures
as a result of climate change.
A general impact of climate change on thermal power generation
(including combined heat and power) is the decreasing efficiency of
thermal conversion as a result of rising temperature that cannot be
offset per se. Yet there is much room to improve the efficiency of
currently operating subcritical steam power plants (IEA, 2010b). As new
materials allow higher operating temperatures in coal-fired power plants
(Gibbons, 2012), supercritical and ultra-supercritical steam-cycle plants
(operating at much higher pressure and temperature conditions than
conventional power plants) will reach even higher efficiency that can
more than compensate the efficiency losses due to higher temperatures.
Yet in the absence of climate change, these efficiency gains from
improved technology would reduce the costs of energy, so there is still
a net economic loss due to climate change. Another problem facing
thermal power generation in many regions is the decreasing volume
and increasing temperature of water for cooling, leading to reduced
power generation, operation at reduced capacity, and even temporary
shutdown of power plants (Ott and Richter, 2008; Hoffmann et al., 2010;
IEA, 2012; Sieber, 2013). Both problems will be exacerbated if carbon
dioxide (CO
2
) capture and handling equipment is added to fossil-fired
power plants: energy efficiency declines by 8 to 14% (IPCC, 2005) and
water requirement per MWh electricity generated can double (Macknick
et al., 2011). Using partial equilibrium river basin models, (Hurd et al.,
2004; Strzepek et al., 2013) estimate USA welfare loses due to thermal
cooling water changes at US$622 million per year up to 2100, a 6.5%
welfare loss in the energy sector. Van Vliet et al. (2012) find that the
southeastern United States, Europe, eastern China, southern Africa, and
southern Australia could potentially be affected by reduced water
available for thermoelectric power and drinking water, inducing changes
to dry or hybrid cooling (with concomitant loss in electric output), or plant
shut downs, with associated impacts on local and regional economic
activity.
Adaptation possibilities range from relatively simple and low-cost
options such as exploiting non-traditional water sources and re-using
process water to measures such as installing dry cooling towers, heat
pipe exchangers, and regenerative cooling (Ott and Richter, 2008; De
Bruin et al., 2009), all which increase costs. Water use regulation, heat
666
Chapter 10 Key Economic Sectors and Services
10
Technology
Changes in climatic
or related attributes
Possible impacts Adaptation options
Thermal
and nuclear
power plants
Increasing air temperature Reduces effi ciency of thermal conversion by 0.1– 0.2% in
t
he USA; by 0.1– 0.5% in Europe, where the capacity loss
i
s estimated in the range of 1– 2% per 1°C temperature
increase, accounting for decreasing cooling effi ciency and
r
educed operation level /shutdown
Siting at locations with cooler local climates where possible
Changing (lower) precipitation and
increasing air temperature increases
t
emperature and reduces the
availability of water for cooling.
Less power generation; annual average load reduction by
0.1– 5.6% depending on scenario
Use of non-traditional water sources (e.g., water from oil and
gas fi elds, coal mines and treatment, treated sewage); re-use
o
f process water from fl ue gases (can cover 25 – 37% of the
power plant’s cooling needs), coal drying, condensers (drier coal
h
as higher heating value, cooler water enters cooling tower),
fl ue-gas desulfurization; using ice to cool air before entering the
gas turbine increases effi ciency and output, melted ice used in
c
ooling tower; condenser mounted at the outlet of cooling tower
to reduce evaporation losses (by up to 20%). Alternative cooling
t
echnologies: dry cooling towers, regenerative cooling, heat
pipe exchangers; costs of retrofi tting cooling options depend on
f
eatures of existing systems, distance to water, required additional
equipment, estimated at US$250,000 – 500,000 per megawatt
Increasing frequency of extreme hot
t
emperatures
Exacerbating impacts of warmer conditions: reduced thermal
a
nd cooling effi ciency; limited cooling water discharge;
overheating buildings; self-ignition of coal stockpiles
Cooling of buildings (air conditioning) and of coal stockpiles
(
water spraying)
D
rought: reduced water availability Exacerbating impacts of warmer conditions, reduced
operation and output, shutdown
S
ame as reduced water availability under gradual climate change
Hydropower
I
ncrease /decrease in average water
a
vailability
I
ncreased / reduced power output Schedule release to optimize income
Changes in seasonal and inter-annual
variation in infl ows (water availability)
Shifts in seasonal and annual power output; fl oods and lost
output in the case of higher peak fl ows
Soft: adjust water management
Hard: build additional storage capacity, improve turbine runner
capacity
Extreme precipitation causing fl oods Direct and indirect (by debris carried from fl ooded areas)
damage to dams and turbines, lost output due to releasing
water through bypass channels
Soft: adjust water management
Debris removal
Hard: increase storage capacity
Solar energy
Increasing mean temperature Improving performance of TH (especially in colder regions),
reducing effi ciency of PV and CSP with water cooling; PV
effi ciency drops by ~0.5% per 1°C temperature increase
for crystalline silicon and thin-fi lm modules as well, but
performance varies across types of modules, with thin fi lm
modules performing better; long-term exposure to heat
causes faster aging.
Changing cloudiness Increasing unfavorable (reduced output), decreasing
benefi cial (increased output) for all types, but evacuated tube
collectors for TH can use diffuse insolation.
CSP more vulnerable (cannot use diffuse light)
Apply rougher surface for PV panels that use diffuse light better;
optimize fi xed mounting angle for using diffuse light, apply
tracking system to adjust angle for diffuse light conditions;
install / increase storage capacity
Hot spells Material damage for PV, reduced output for PV and CSP;
CSP effi ciency decreases by 3 – 9% as ambient temperature
increases from 30 to 50°C and drops by 6% (tower) to 18%
(trough) during the hottest 1% of time
Cooling PV panels passively by natural air fl ows or actively by
forced air or liquid coolants
Hail Material damage to TH: evacuated tube collectors are more
vulnerable than fl at plate collectors.
Fracturing as glass plate cover, damage to photoactive
material
Flat plate collectors: using reinforced glass to withstand
hailstones of 35 mm (all of 15 tested) or even 45 mm (10 of 15
tested); only 1 in 26 evacuated tube collectors withstood 45-mm
hailstones.
Increase protection to current standards or beyond them
Wind power
Windiness: total wind resource
(multi-year annual mean wind power
densities); likely to remain within ±50%
of current values in Europe and North
America; within ±25% of 1979 – 2000
historical values in contiguous USA
Change in wind power potential Site selection
Wind speed extremes: gust, direction
change, shear
Structural integrity from high structural loads; fatigue,
damage to turbine components; reduced output
Turbine design, lidar-based protection
Table 10-1 | Main projected impacts of climate change and extreme weather events on energy supply and the related adaptation options.
Notes: CSP = concentrating solar power; PV = photovoltaic; TH = thermal heating.
Sources: EPA (2001); Parkpoom et al. (2005); Norton (2006); Pryor et al. (2006); Walter et al. (2006); Christensen and Busuioc (2007); DOE (2007); NETL National Energy
Technology Laboratory (2007); Schaefl i et al. (2007); Bloom et al. (2008); Feeley III et al. (2008); Haugen and Iversen (2008); Leckebusch et al. (2008); Markoff and Cullen (2008);
Ott and Richter (2008); Sailor et al. (2008); Droogers (2009); Förster and Lilliestam (2009); Honeyborne (2009); Kurtz et al. (2009); SPF (2009); Hoffmann et al. (2010); Pryor and
Barthelmie (2010, 2011, 2013); Pryor and Schoof (2010); Kurtz et al. (2011); Linnerud et al. (2011); Mukheibir (2013); Patt et al. (2013); Sieber (2013); Williams (2013).
667
10
Key Economic Sectors and Services Chapter 10
d
ischarge restrictions, and occasional exemptions might be an institutional
adaptation (Eisenack and Stecker, 2012). Though it is easier to plan for
changing climatic conditions and select the site and the conforming
cost-efficient cooling technology for new builds, response options are
more limited for existing power plants, especially for those toward the
end of their economic lifetime.
Climate change impacts on thermal efficiency and cooling water
availability affect nuclear power plants as well but the safety regulations
are stricter than for fossil-fired plants (Williams and Toth, 2013). A range
of alternative cooling options are available to deal with water deficiency,
ranging from re-using wastewater and recovering evaporated water
(Feeley III et al., 2008) to installing dry cooling (EPA, 2001).
The implications of EWEs for nuclear plants can be severe if not properly
addressed. Reliable interconnection (on-site power and instrumentation
connections) of intact key components (reactor vessel, cooling equipment,
control instruments, back-up generators) is indispensable for the safe
operation and/or shutdown of a nuclear reactor. For most of the existing
global nuclear fleet, a reliable connection to the grid for power to run
cooling systems and control instruments in emergency situations is
another crucial item (IAEA, 2011). Several EWEs can damage the
components or disrupt their interconnections. Preventive and protective
measures include technical and engineering solutions (circuit insulation,
shielding, flood protection) and adjusting operation to extreme conditions
(reduced capacity, shutdown) (Williams and Toth, 2013).
Hydropower is by far the largest of renewable energy sources in the
current electricity mix. It is projected to remain important in the future,
irrespective of the climate change mitigation targets in many countries
(IEA, 2010a,b). The resource base of hydropower is the hydrologic cycle
driven by prevailing climate and topology. The former makes the
resource base and hence hydropower generation highly dependent on
future changes in climate and related changes in extreme weather
events (Ebinger and Vergara, 2011; Mukheibir, 2013).
Assessing the impacts of climate change on hydropower generation is
highly complex. A series of nonlinear and region-specific changes in
mean annual and seasonal precipitation and temperatures, the resulting
evapotranspiration losses, shifts in the share of precipitation falling as
snow and the timing of its release from high elevation, and the climate
response of glaciers make resource estimates difficult (see Chapters 2
and 3) while regional changes in water demand due to changes in
population and economic activities (especially irrigation demand for
agriculture) present competition for water resources that are hard to
project (see Section 10.3). Further complications stem from the possibly
increasing need to combine hydropower generation with changing flood
control and ecological (minimum dependable flow) objectives induced
by changing climate regimes. For hydropower locations, adaption to
climate change to maintain output has been reported; in Ethiopia, Block
and Strzepek (2012) report that capital expenditures through 2050 may
either decrease by approximately 3% under extreme wet scenarios or
increase by up to 4% under a severe dry scenario. In the Zambezi river
basin, hydropower may fall by 10% by 2030, and by 35% by 2050 under
the driest scenario (Strzepek et al., 2012). Lower generation is likely in
the upstream power stations of the Zambezi basin and increases are
likely downstream (Fant et al., 2013).
F
ocusing on the possible impacts of climate change on hydroelectricity
and the adaptation options in the sector in response to the changes in
the amount, the seasonal and interannual variations of available water,
and in other demands, the conclusion from the literature is that the
overall impacts of climate change and EWEs on hydropower generation
by 2050 is expected to be slightly positive in most regions (e.g., in Asia,
by 0.27%) and negative in some (e.g., in Europe, by –0.16%), with
diverging patterns across regions, watersheds within regions, and even
river basins within watersheds (IPCC, 2011). Adaptation responses and
planning tools for long-term hydrogeneration may need to be enhanced
to cope with slow but persistent shifts in water availability. Short-term
management models may need to be enhanced to deal with the impacts
of EWEs. A series of hard (raising dam walls, adding bypass channels)
and soft (adjusting water release) measures are available to protect the
related infrastructure (dams, channels, turbines, etc.) and optimize incomes
by timing generation when electricity prices are high (Mukheibir, 2013).
Solar energy is expected to increase from its currently small share in
the global energy balance across a wide range of mitigation scenarios
(IEA, 2008, 2009, 2010a,b). The three main types of technologies for
harnessing energy from insolation include thermal heating (TH; by flat
plate, evacuated tube, and unglazed collectors), photovoltaic (PV) cells
(crystalline silicon and thin film technologies), and concentrating solar
power (CSP; power tower and power trough producing heat to drive a
steam turbine for generating electricity). The increasing body of literature
exploring the vulnerability and adaptation options of solar technologies
to climate change and EWEs is reviewed by Patt et al. (2013).
All types of solar energy are sensitive to changes in climatic attributes
that directly or indirectly influence the amount of insolation reaching
them. If cloudiness increases under climate change (WGI AR5 Chapters
11, 12), the intensity of solar radiation and hence the output of heat or
electricity would be reduced. Efficiency losses in cloudy conditions are
less for technologies that can operate with diffuse light (evacuated tube
collectors for TH, PV collectors with rough surface). Since diffuse light
cannot be concentrated, CSP output would cease under cloudy conditions
but the easy and relatively inexpensive possibility to store heat reduces
this vulnerability if sufficient volume of heat storage is installed (Khosla,
2008; Richter et al., 2009).
The exposure of sensitive material to harsh weather conditions is another
source of vulnerability for all types of solar technologies. Windstorms
can damage the mounting structures directly and the conversion units
by flying debris, whereby technologies with smaller surface areas are
less vulnerable. Hail can also cause material damage and thus reduced
output and increased need for repair. Depending on regional conditions,
strong wind can deposit sand and dust on the collector’s surface, reducing
efficiency and increasing the need for cleaning.
Climate change and EWE hazards per se do not pose any particular
constraints for the future deployment of solar technologies. Technological
development continues in all three solar technologies toward new
designs, models, and materials. An objective of these development efforts
is to make the next generation of solar technologies less vulnerable to
existing physical challenges, changing climatic conditions, and the
impacts of EWEs. Technological development also results in a diverse
portfolio of models to choose from according to the climatic and
668
Chapter 10 Key Economic Sectors and Services
10
w
eather characteristics of the deployment site. These development
efforts can be integrated in addressing the key challenge for solar
technologies today: reducing the costs.
Harnessing wind energy for power generation is an important part of
the climate change mitigation portfolio in many countries. Assessing
the possible impacts of climate change and EWEs and identifying
possible adaptation responses for wind energy is complicated by the
complex dynamics characterizing this generation source. Relevant
attributes of climate are expected to change; the technology is evolving
(blade design, other components); see Kong et al. (2005) and Barlas and
Van Kuik (2010); there is an increasing deployment offshore and a
transition to larger turbines (Garvey, 2010) and to larger sites (multi
megawatt arrays) (Barthelmie et al., 2008).
The key question concerning the impacts of a changing climate regime
on wind power is related to the resource base: how climate change will
rearrange the temporal (inter- and intra-annual variability) and spatial
(geographical distribution) characteristics of the wind resource. In the
next few decades, wind resources (measured in terms of multi-annual
wind power densities) are estimated to remain within the ±50% of the
mean values over the past 20 years in Europe and North America (Pryor
and Barthelmie, 2010). The wide range of the estimates results from the
circulation and flow regimes in different General Circulation Models
(GCMs) and Regional Climate Models (RCMs) (Bengtsson et al., 2006;
Pryor and Barthelmie, 2010). A set of four GCM-RCM combinations for
the period 2041–2062 indicates that average annual mean energy
density will be within ±25% of the 1979–2000 values in all 50-km grid
cells over the contiguous USA (Pryor et al., 2011; Pryor and Barthelmie,
2013). Yet, little is known about changes in the interannual, seasonal,
or diurnal variability of wind resources.
Wind turbines already operate in diverse climatic and weather conditions.
As shown in Table 10-1, siting, design, and engineering solutions are
available to cope with various impacts of gradual changes in relevant
climate attributes over the coming decades. The requirements to
withstand extreme loading conditions resulting from climate change
are within the safety margins prescribed in the design standards,
although load from combinations of extreme events may exceed the
design thresholds (Pryor and Barthelmie, 2013). In summary, the wind
energy sector does not face insurmountable challenges resulting from
climate change.
In the coal fuel cycle, vulnerability in mining depends on mining method.
Surface mining might be particularly affected by high precipitation
extremes and related floods and erosion, and temperature extremes,
especially extreme cold that might encumber extraction for some time,
whereas impacts on coal cleaning and operation of underground mines
will probably be less severe (Ekman, 2013). Changes in drainage and
runoff regulation for on-site coal storage as well as in coal handling
might be required due to the increased moisture content of coal and
more energy might be required for coal drying before transportation
(CCSP, 2007). At the back end of the fuel cycle, the management of fly-
ash, bottom ash, and boiler slag may need to be modified in response
to changes in some EWE patterns such as wind, precipitation, and
floods. Impacts on biomass-based energy sources are discussed in
Chapter 7 of this report.
C
limate- and weather-related hazards in the oil and gas sector include
tropical cyclones with potentially severe effects on offshore platforms
and onshore infrastructure as well, leading to more frequent production
interruptions and evacuation (Cruz and Krausmann, 2013). Gradual
changes in air temperature and precipitation are projected to generate
risk and opportunities for the oil and gas industry. For example, new
areas for oil and gas exploration could open in the Arctic, potentially
increasing the technically recoverable resource base (Cruz and
Krausmann, 2013). Reduced sea ice thickness and coverage might open
new shipping routes, thus reducing shipping costs, while ice scour and
ice pack loading on marine structures would increase. However, most
changes involve increased risks, such as thawing permafrost would
increase construction costs on unstable ground relative to ice-based
construction, while thaw subsidence would trigger increased maintenance
costs. Sea level rise (SLR) and coastal erosion would degrade coastal
barriers, damage facilities, and trigger relocation (Dell and Pasteris,
2010).
10.2.3. Transport and Transmission of Energy
Primary energy sources (coal, oil, gas, uranium), secondary energy forms
(electricity, hydrogen, warm water), and waste products (CO
2
, coal ash,
radioactive waste) are transported in diverse ways to distances ranging
from a few to thousands of kilometers. The transport of energy-related
materials by ships (ocean and inland waters), rail, and road are exposed
to the same impacts of climate change as the rest of the transport sector
(see Section 10.4). This subsection deals only with transport modes that
are unique to the energy sector (power grid) or predominantly used by
it (pipelines). Table 10-2 provides an overview of the impacts of climate
change and EWEs on energy transmission, together with the options to
reduce vulnerability.
Pipelines play a central role in the energy sector by transporting oil and
gas from the wells to processing and distributing centers to distances
from a few hundred to thousands of kilometers. With the potential
spread of CO
2
capture and storage (CCS) technology, another important
function will be to deliver CO
2
from the capture site (typically fossil
power plants) to the storage site onshore or offshore. Pipelines have
been operated for over a century in diverse climatic conditions on land
from hot deserts to permafrost areas and increasingly at sea. This
implies that technological solutions are available for the construction
and operation of pipelines under diverse geographical and climatic
conditions. Yet adjustments may be needed in existing pipelines and
improvements in the design and deployment of new ones in response
to the changing climate and weather conditions.
In addition to reduced line-heating and dilution needs due to reduced
viscosity of liquid fuels under warmer temperatures, pipelines will be
affected mainly by secondary impacts of climate change: SLR in coastal
regions, melting permafrost in cold regions, floods washing away
infrastructure, landslides triggered by heavy rainfall, and bushfires
caused by heat waves or extreme temperatures in hot regions. A
proposed way to reduce vulnerability to these events is to amend land
zoning codes, risk-based design, and construction standards for new
pipelines, and structural upgrades to existing infrastructure (Antonioni
et al., 2009; Cruz and Krausmann, 2013).
669
10
Key Economic Sectors and Services Chapter 10
Owing to the very function of the electricity grid to transmit power from
generation units to consumers, the bulk of its components (overhead
lines, substations, transformers) are located outdoors and exposed to
EWE. The power industry has developed numerous technical solutions
and related standards to protect assets and provide reliable electricity
supply under existing climate and weather conditions worldwide.
However, these assets and the reliability of supply may be vulnerable
to changes in the frequency and intensity of EWEs under changing
climate conditions (DOE, 2013). Higher average temperatures increase
transmission efficiency and reduce current carrying capacity, but this
effect is relatively small compared to the physical and monetary
damages that can be caused by EWEs (Ward, 2013). Historically, high
wind conditions, including storms, hurricanes, and tornados, have been
the most frequent cause of grid disruptions (mainly due to damages to
the distribution networks); and more than half of the damage was
caused by trees (Reed, 2008). Other impacts include freezing precipitation,
ice and winter storms, wildfires caused by higher temperatures, less
precipitation, and increased tree death caused by pests. If the frequency
and power of high wind conditions, as well as extreme precipitation
events, will increase in the future, vegetation management along
existing power lines, and rerouting new transmission lines along roads
or across open fields or moving them underground might help reduce
related risks. An important institutional option is to redefine technical
standards to provide incentives for grid operators to implement
appropriate adaptation measures. Such measures are less expensive to
implement as part of the maintenance-renewal cycle than as independent
retrofit measures.
The economic importance of a reliable transmission and distribution
network is highlighted by the fact that the damage to customers tends
to be much higher than the price of electricity not delivered (lost
production, electricity enabled commerce, service delivery, food spoilage,
lost or restricted water availability). Losses can be minimized through
efficient rationing of electricity (de Nooij et al., 2009) if generation is the
limiting factor. Designing and building climate-resilient infrastructure
will depend on technical standards, market governance, and the type
and degree of liberalization and deregulation of grid services.
10.2.4. Macroeconomic Impacts
Most economic research related to climate change impacts on the energy
sector has focused on mitigation rather than the economic implications
of climate change itself. Table 10-3 summarizes the recent studies on the
economic implications of climate change and extreme weather impacts
in the energy sector.
Assessing across a broad array of studies that focus on different regions
and regional divisions, examine different climate change impacts,
include a different mix of sectors, model different time frames, make
different assumptions about adaptation, and employ different types of
models with different output metrics leads to the overall conclusion
that the macroeconomic impact of climate change on energy demand
is likely to be minimal in developed countries (Bosello et al., 2007a,
2009; Aaheim et al., 2009; Jochem et al., 2009; Eboli et al., 2010).
The current literature sheds less light on the implications for developing
countries and on other climate impacts in the energy sector beyond
those related to changes in energy demand. Europe is the focus of most
of the literature so far. Only two studies focus on developing countries:
Mexico and Brazil (Boyd and Ibarraran, 2009; de Lucena et al., 2010).
Asia and Africa are not well represented, appearing as aggregated
regions in only three global studies (Bosello et al., 2007a, 2009; Eboli
et al., 2010). The limited results indicate that developing countries likely
face a greater negative GDP impact with respect to climate change
implications for the energy sector than developed countries, largely
because of higher expected temperature changes (Aaheim et al., 2009;
Boyd and Ibarraran, 2009; Eboli et al., 2010).
Technology Changes in climatic or related attribute Impacts Adaptation options
Pipelines
Melting permafrost Destabilizing pillars, obstructing access for
m
aintenance and repair
Adjust design code and planning criteria, install
d
isaster mitigation plans
Increasing high wind, storms, hurricanes Damage to offshore and onshore pipelines and
r
elated equipment, spills; lift and blow heavy
objects against pipelines, damage equipment
Enhance design criteria, update disaster preparedness
F
looding caused by heavy rain, storm surge, or sea level rise Damage to pipelines, spills Siting (exclude fl ood plains), waterproofi ng
Electricity grid
I
ncreasing average temperature Increased transmission line losses Include increasing temperature in the design
calculation for maximum temperature
/
rating
I
ncreasing high wind,
storms, hurricanes
D
irect mechanical damage to overhead lines
,
towers
, poles, substations, fl ashover caused by
live cables galloping and thus touching or getting
t
oo close to each other;
indirect mechanical
damage and short circuit by trees blown over or
d
ebris blown against overhead lines
A
djust wind loading standards
,
reroute lines alongside
roads or across open fi
elds; manage vegetation;
improve storm and hurricane forecasting
Extreme high temperatures Lines and transformers may overheat and trip off;
fl
ashover to trees underneath expanding cable
Increase system capacity,
increase tension in the line to
r
educe sag,
add external coolers to transformers
Combination of low temperature
, wind and rain, ice storm
Physical damage (including collapse) of overhead
lines and towers caused by ice build-up on them
Enhance design standard to withstand larger ice and
wind loading,
reroute lines alongside roads or across
o
pen fi
elds; improve forecasting of ice storms impacts
on overhead lines and on transmission circuits
Table 10-2 | Main impacts of climate change and extreme weather events on pipelines and the electricity grid.
Sources: Bayliss (1996); Krausmann and Mushtaq (2008); Reed (2008); Hines et al. (2009); Winkler et al. (2010); Vlasova and Rakitina (2010); McColl (2012); Cruz and
Krausmann (2013); Ward (2013).
670
Chapter 10 Key Economic Sectors and Services
10
Study
Model
type
Climate impacts modeled Energy /economic impacts Regions
Sectors
studied
B
osello et al.
(2009)
I
AM Rising temperatures /changing demand for energy; impacts from
four other sectors /events (Global, 2001– 2050)
C
hange in gross domestic product (GDP) in 2050 due to
rising temperatures and changing energy demand: 0 – 0.75%
(
+1.2°C); – 0.1% to 1.2% (+3.1°C)
1
4 4
J
orgenson et al.
(2004)
C
GE Rising temperatures /changing demand for energy; climate
impacts from three other sectors (USA, 2000 – 2100)
O
ptimistic adaptation: 4 – 6.7% higher energy productivity per
year (2000 – 2100)
O
utput from electricity: – 6% in 2050; GDP is +0.7% (aggregate
all sectors, average annual 2000 – 2100)
P
essimistic adaptation: 0.5 – 2.2% lower energy productivity
per year
O
utput from electricity: +2% in 2050; GDP is – 0.6% (aggregate
impact all sectors)
1
35
B
osello et al.
(2007a)
C
GE Rising temperatures /changing demand for energy (Global, 2050) Change in GDP in 2050 (perfect competition): – 0.297% to
0.027%
C
hange in GDP in 2050 (imperfect competition): – 0.303% to
0.027%
8
1
Aaheim et al.
(
2009)
CGE Change in precipitation
affects share of hydroelectric power;
r
ising temperatures /changing demand for energy; impacts from
four other sectors (Western Europe, 2071– 2100)
Impact from all sectors in 2100: GDP in cooler regions: – 1%
t
o – 0.25%
GDP in warmer regions: – 3% to – 0.5%
Adaptation can mitigate 80 – 85% of economic impact
8 11
Boyd and
I
barraran
(2009)
CGE Drought scenario affecting hydroelectric plus three other sectors
(
Mexico, 2005 – 2026)
• Generation output in 2026: – 2.1%
•
R
efi ning output: – 10.1%
• Coal output: – 7.8%
•
N
G output: – 2%
• Crude oil output: +1.7%
• GDP: – 3%
With adaptation:
• Generation output in 2026: 0.24%
• Refi ning output: 1.36%
• Coal output: 1.09%
• NG output: 0.34%
• Crude oil output: 0.22%
• GDP: 0.33%
1 2
Jochem et al.
(2009)
PE /CGE Rising temperatures /changing demand for energy; change in
technical potential of renewables; change in rainfall induces
change in hydroelectric production; high temperatures induce
water temperatures exceeding regulatory limits (Europe); high
temperatures induce greater electric grid losses and lower
thermal effi ciency; generic extreme events induce reduced
capital stock in CGE model (EU27+2, 2005 – 2050)
• GDP (Europe): – 50 billion € p.a. in 2035
• GDP (Europe): – 240 billion € p.a. in 2050
• GDP (EU regions): – 0.1% to – 0.4% in 2035
• GDP (EU regions): – 0.6% to – 1.3% in 2050
• Jobs (Europe): – 380K in 2035
• Jobs (Europe): – 1 million in 2050
25 1
Eboli et al.
(2010a)
CGE Rising temperatures /changing demand for energy; climate
impacts in four other sectors modeled (Global, 2002 – 2100)
By 2100, change in GDP due to climate impacts on energy
demand vary by country between about – 0.15% and 0.7%.
USA and Japan were negative and all other countries positive.
Overall economic impact from all sectors is neutral to positive
for developed countries and negative for developing ones.
8 17
Golombek et al.
(2011)
PE Rising temperatures /changing demand for energy; rising
temperatures /reduced thermal effi ciency; change in water
infl ow (Western Europe, 2030)
Net impact on the price of electricity is a 1% increase.
Generation decreases by 4%.
13 4
de Lucena et al.
(2010)
PE Changing precipitation induces change in hydroelectric
production; rising temperatures induce lower NG thermal
effi ciency; rising temperatures induce change in demand for
energy (Brazil, 2010 – 2035)
New generating capacity needed to produce additional
153 – 162 TWh per year.
Capital investment of US$48 – 51 billion, which is equivalent to
10 years of capital expenditures in Brazil’s long-term energy
plan.
US$6.9 – 7.2 billion in additional annual operating expenses for
each year in which worst-case hydroelectric production occurs
1 11
Bye et al. (2008) PE Water shortages (Nordic countries, hypothetical 2-year period) Water shortage scenarios can lead to a 100% increase in
electricity prices at peak demand over a 2-year period. Higher
prices lead to marginal reductions in demand (about 1 – 2.25%).
41
Koch et al.
(2012)
PE High temperatures induce water temperatures exceeding
regulatory limits (Berlin, 2010 – 2050)
Thermal plant outages amounting to 60 million € for plants in
Berlin through 2050
11
Gabrielsen et al.
(2005)
Econometric Rising temperatures /changing demand for energy; change
in water infl ow; change in wind speeds (Nordic countries,
2000 – 2040)
Net change in electricity supply in 2040: 1.8%
Change in electricity demand: 1.4%
Change in electricity price: – 1.0%
41
Table 10-3 | Economy-wide implications of impacts of climate change and extreme weather on the energy sector.
671
10
Key Economic Sectors and Services Chapter 10
Despite the considerable number of potential climate change and
extreme weather phenomena—higher mean temperatures, changes in
rainfall patterns, changes in wind patterns, changes in cloud cover and
average insolation, lightning, high winds, hail, sand storms and dust,
extreme cold, extreme heat, floods, drought, fire, and SLR—and their
potential impacts on electricity generation and transmission systems,
fuel infrastructure and transport systems, and energy demand (Williams,
20