European power sector survey is coping with climate change challenges and opportunities
A new pan-European survey conducted by DNV answers how the European power sector is coping with climate change challenges and opportunities.
The global climate change will have a major impact on the future business environment in Europe. The power industry is not only a significant emitter, but also a key player in bringing clean and renewable energy to the world. Based on this reality, DNV has released the results of its study of the European power sector’s future risks, which includes a special focus on climate change.
DNV surveyed the sustainability managers of 13 leading European power companies, with a particular emphasis on the approach taken to climate change risk management and best practices. The survey also assessed the perceived operational risk exposure in operations in Europe and developing markets, both today and five years into the future.
Elisabeth Tørstad, DNV's Director for Cleaner Energy, said in DNV's experience, the companies that manage to control risk and take advantage of opportunities in times when the business environment is changing are more likely to be successful in the longer term.
“We wanted to explore how the European power sector views the new challenges and opportunities arising from climate change,” Tørstad said. “Further, we aimed to rank the business risks to which the companies’ own operations might be exposed, both today and five years into the future.”Gate valves
The findings in each focus area vary in several ways, but the main conclusions are:
• The main opportunity for the power sector is the further expected increase in the demand for electricity;
• The main challenge for the power sector is the ability to meet this increased demand for electricity and at the same time reduce the overall carbon dioxide (CO2) emissions;
• The identified major perceived risk is political failure to effectively support the industry on critical contemporary issues, e.g., establishing the regulatory frameworks necessary to facilitate investments in renewables; and
• The reputational risk from being seen as a contributor to climate change stands out as another main risk contributor.
Tørstad said she experienced a strong interest among the participating companies in addressing and discussing the business implications of climate change.
“The individual participants reported an obvious benchmark value from the results. Being able to define their own risk levels in comparison to other industry players may also serve as basis for internal focus on risk,” she said. “This is one the reasons for our upcoming parallel survey of the US power sector.”
The qualitative and explorative nature of the survey methodology allowed for further and deeper discussions. Respondent feedback included a broad range of observations:
“The power industry should be seen as part of the solution rather than as part of the problem;”
“Best practice would imply both having a large share of renewable energy in the portfolio and making current fossil production carbon neutral through measures such as CCS (carbon capture and storage);” and “The problem is not the sector being seen as a contributor, but the sector actually being a contributor, as electricity production is responsible for a substantial part of the current global CO2 emissions.”
Tørstad said the outcome of this survey is important for everyone, as the power sector will have to play a vital role in the necessary transformation of fossil fuel economies into future low carbon economies.
“The individual participants reported an obvious benchmark value from the results. Being able to define their own risk levels in comparison to other industry players may also serve as basis for internal focus on risk,” she said. This is one the reasons for our upcoming parallel survey of the US power sector.”
To download the survey, visit http://www.dnv.com/press_area/
