Climate change adaptation strategies for international energy companies - Курсовая работа

The latter comprised carbon dioxide emissions dynamics and current investment in renewable energies by each company. · For the whole research relevant news, media and professional articles were reviewed and taken into account. 1. Climate change risks for energy sector companies and climate change governmental and institutional policies impact on energy companies operations 1.1 Climate change risks for energy sector companies According to The United Nations Framework Convention on Climate Change (UNFCCC) climate change is a change of climate which is attributed directly or indirectly to human activity that alters the composition of the global atmosphere and which is in addition to natural climate variability observed over comparable time periods . Researchers and scientists still argue on whether the human activity is the only cause of climate change but the majority agrees that anthropogenic activity impacts climate change in a varying degree. This majority in 2010 accounted for more than 97% of all the researchers engaged in climate change issue. The Intergovernmental Panel on Climate Change (IPCC) also concluded, that human activities, particularly emissions of carbon dioxide, are very likely to be the dominant cause of climate change. This degree of probability in scientific world is equal to 95-100% and it means that scientists are nowadays as confident in anthropogenic causes of climate change as in the connection between smoking and lungs cancer. Energy sector is usually considered as the major contributor to climate change because of amount of carbon dioxide emissions the industry causes. According to the National Oceanic and Atmospheric Administration (NOAA) there is a direct correlation between the anomalies of annual average temperatures of the planet and the CO2 concentration in the atmosphere (see p.55, Appendix, Graph 1). The energy sector influence might become evident if we observe the share of the world’s CO2 emissions from burning of fossil fuel: in 2013 it reached almost 90%. Furthermore, this evaluation proves that energy sector companies take more climate change risks than companies in any other industry. Thus, they are not only the world’s major producers of carbon dioxide emissions which forces climate change but the largest climate change risk-takers as well. Wright and Nyberg considered the other differentiation and divided climate change risks in four categories: physical risks, regulatory risks, market risks and reputational risks. Let us revise all these types of risks in particular as well as suggest the possible corporate reactions to them. Physical risk is a risk of extreme weather events provoked by climate change leading to threats to operations and infrastructure. For energy sector companies this risk might result in breaks in oil and gas pipelines, accidents at nuclear plants, etc. To manage this risk companies can use climate modelling, plan various scenarios for physical events, safeguard and relocate physical infrastructure, develop emergency strategies for extreme weather events or sell off physically vulnerable activities. Physical risk is probably the most addressed in all corporate climate change mitigation policies. It directly affects business operations leading to huge costs for companies. In 2015 the International Energy Agency even published Making the energy sector more resilient to climate change” brochure in which the Agency provided various techniques for energy sector companies to prevent technical disruptions and infrastructure damages caused by extreme weather conditions and climate change consequences. Regulatory risk is a risk of legislative regulation of carbon emissions via carbon taxes”, pricing of greenhouse gas emissions in a carbon market or mandatory restrictions. Some examples of minimizing those risks can be: lobbying against carbon pollution regulation, building coalitions with opponents of action on climate change, investing in low-carbon technologies and renewable energy to reduce carbon emissions intensity, incorporating carbon pricing in investment decisions, adopting a ‘leadership’ position advocating market forms of carbon regulation, voluntary reporting of carbon emissions to avoid mandatory requirements. Market risk may happen when, for instance, competitors gain advantage via new green technologies and products. The majority of large international energy companies also embrace this type of risk because their customers might need low-carbon technologies or decrease in CO2 emissions. To mitigate this type of risk companies invest in R&D to identify and create green products and services, scan the market for competitive threats in order to mimic new technologies and products, takeover and acquire green companies. Reputational risk occurs when consumers view companies’ activities as environmentally harmful which may result in declining sales and reputation. The companies usually try to improve their image and reputation through green