Climate change policy responses implications for the extractive industry
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Climate Change & Policy Responses: Implications for the Extractive Industry. Dr. Shiv Someshwar Director Climate Policy & Advisor SDSN CGSD/Earth Institute, Columbia University Extractive Industry & Sustainable Development Training Pro gram 19 Jun 2014, New York.

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Climate change policy responses implications for the extractive industry

Climate Change & Policy Responses: Implications for the Extractive Industry

Dr. Shiv Someshwar

Director Climate Policy & Advisor SDSN

CGSD/Earth Institute, Columbia University

Extractive Industry & Sustainable Development Training Program

19 Jun 2014, New York

With thanks to Kye Baroang and Haresh Bhojwani


Key messages

Key messages

  • Climate is changing

  • Global mitigation policies (nature, commitment, binding…) are in flux

  • The level of impact depends on industry type and policy exposure (Annex 1, post-Kyoto ‘binding’…)

  • Understanding of climate variability & change and of policies is critical for anticipatory planning

    Do nothing is not a sound business proposition for company sustainability


Structure

Structure

Background on climate variability and change

Climate of selected countries: historical conditions and projections

Overview of the UNFCCC and Kyoto Protocol

Implications of climate change & of policy responses for extractive industries

Managing climate risks and opportunities


Weather climate variability climate change

Weather, climate variability,climate change

Atmosphere-Land conditions

Ocean-atmosphere-land conditions (conditions vary at slower rates – leads to predictability)

Climate change: in addition to physical processes, assumptions about human/societal behavior

“Weather”

  • 1-10 days

  • 2-3 months

  • 6 months – 1 year

  • Decades

  • Several decades

  • Centuries

“Climate Variability”

“Climate Change”


Climate change policy responses implications for the extractive industry

What affects the climate?


Climate change policy responses implications for the extractive industry

Historical global temperature and CO2 levels


Climate change policy responses implications for the extractive industry

Climate variability and climate change

New record high

Regionally -averaged temperature

Long term average

1900

2000

2030

Year


Climate change policy responses implications for the extractive industry

A changing climate shifts the odds and distribution of climate events

Source: IPCC, 2011


H istorical climate pattern analysis

Historical climate pattern analysis

Raw precipitation data

Analysis of anomalies at different timescales

Climate Change

Decadal variability

Interannual variability

Source: Annual precipitation data from Centro de Ciencias de la Atmósfera (CCA) at the Universidad NacionalAutónoma de México (UNAM).


S tatus in understanding and predicting climate across timescales counter intuitive

Status in understanding and predicting climate across timescales: counter-intuitive

Understanding

“Good”

Predictability

“Some Info”

“Frontier”

Timescale

Seasonal-Interannual

Climate

Change

Decadal


Climate prediction s

Climate prediction(s)

  • Seasonal prediction

    • Ocean-atmosphere interactions: “memory” leads to prediction

    • El Nino Southern Oscillation, MJO, IOD

  • Decadal projection

    • Limited knowledge, growing research area

    • Atlantic and Pacific Decadal Oscillations (ADO, PDO)

  • Climate change

    • Physical and socio-economic processes

    • Global-scale temperature change generally well-understood

    • Precipitation and regional/local patterns more uncertain


Climate change

Climate change

  • UNFCCC definition focus – ‘human impacts’ – often confused with natural variability

  • Climate change models are scenario projections (not absolute predictions) modeling effects of GHGs

    • “What ifs” based on possible emissions scenarios

    • Not initialized (started) with current climate conditions

  • Best agreement is on global average temperature increases

  • Effects on precipitation patterns more uncertain

  • Model disagreement over regional trends


Climate change policy responses implications for the extractive industry

Socio-economic assumptions for emissions scenarios

GTZ Climate Change Information for Effective Adaptation: A Practitioner’s Manual, 2009.


Temperature projections based on emissions scenario

Temperature projectionsbased on emissions scenario

Figure 3.2. Left panel: Solid lines are multi-model global averages of surface warming (relative to 1980-1999) for the SRES scenarios A2, A1B and B1,

shown as continuations of the 20th century simulations. The orange line is for the experiment where concentrations were held constant at year 2000 values.

The bars in the middle of the figure indicate the best estimate (solid line within each bar) and the likely range assessed for the six SRES marker scenarios

at 2090-2099 relative to 1980-1999. The assessment of the best estimate and likely ranges in the bars includes the Atmosphere-Ocean General Circulation

Models (AOGCMs) in the left part of the figure, as well as results from a hierarchy of independent models and observational constraints.

Right panels: Projected surface temperature changes for the early and late 21st century relative to the period 1980-1999. The panels show the multi-AOGCM

average projections for the A2 (top), A1B (middle) and B1 (bottom) SRES scenarios averaged over decades 2020-2029 (left) and 2090-2099 (right). {WGI

10.4, 10.8, Figures 10.28, 10.29, SPM}

Source: IPCC (2007) Climate Change 2007: Synthesis Report. Contribution of Working Groups

I, II and III to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change.


Precipitation projections greater uncertainty

Precipitation projections: greater uncertainty

Dec-Jan-Feb

Jun-Jul-Aug

Source: IPCC (2007) Climate Change 2007: Synthesis Report. Contribution of Working Groups

I, II and III to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change.


Climate models global vs regional

Climate Models: Global vs. Regional

Source: Hadley Centre (2004) PRECIS Handbook.


Climate of selected countries historical conditions and projections

Climate of selected countries: historical conditions and projections


Climate change policy responses implications for the extractive industry

World Bank Climate Change Knowledge Portal


Climate change policy responses implications for the extractive industry

World Bank Climate Change Knowledge Portal


Climate change policy responses implications for the extractive industry

SW Uruguay: Monthly Means of

Precipitation (1915-2008)

Pick 15 years randomly


Climate change policy responses implications for the extractive industry

SW Uruguay: Monthly precipitation means (1915-2008)

None of the Years behaves like the long term mean

Probability of a Year being “Average” = ZERO

Still, Planning is based on “AVERAGE” year

Can we use something with Probability > 0 ?

Climate Forecasts

(likelihood of “Drier”, “Wetter”)


Climate change policy responses implications for the extractive industry

Source: S. Zebiak


Climate change policy responses implications for the extractive industry

July-SeptemberDrier

January-March

Drier

Source for next 5 slides: El Nino Teleconnections in Africa, Latin America and Caribbean, and Asia Pacific, Someshwar et al. 2009


Climate change policy responses implications for the extractive industry

October-December

Wetter

October-December

Drier


January march drier

July-SeptemberDrier

January-MarchDrier


October december drier

October-DecemberDrier


Climate change policy responses implications for the extractive industry

July-SeptemberWetter

October-DecemberWetter


October december wetter

October-DecemberWetter


Climate change policy responses implications for the extractive industry

Climate Change Projections

Ensemble of all IPCC models and including regional models and data for A1B

(increase 2080-2099 vs. 1980-1999)

Temperature

Annual

Dec-Jan-Feb

Jun-Jul-Aug

Precipitation

Annual

Dec-Jan-Feb

Jun-Jul-Aug


Climate change policy responses implications for the extractive industry

Climate Change Projections

Ensemble of all IPCC models and including regional models and data for A1B

(increase 2080-2099 vs. 1980-1999)

Temperature

Annual

Dec-Jan-Feb

Jun-Jul-Aug

Precipitation

Annual

Dec-Jan-Feb

Jun-Jul-Aug


Climate change policy responses implications for the extractive industry

Climate Change Projections

Ensemble of all IPCC models and including regional models and data for A1B

(increase 2080-2099 vs. 1980-1999)

Temperature

Annual

Dec-Jan-Feb

Jun-Jul-Aug

Precipitation

Annual

Dec-Jan-Feb

Jun-Jul-Aug


Climate change policy responses implications for the extractive industry

World Bank Climate Change Knowledge Portal


In considering impacts on industry we need to be mindful of the changing policy environment as well

In considering ‘impacts’ on industry, we need to be mindful of the changing ‘policy environment’ as well..

Overview of the UN Framework Convention on Climate Change (UNFCCC)


Unfccc overview

UNFCCC overview

Adopted in June1992 in Rio - UNCED (UN Conference on Environment and Development/Earth Summit) with primary goal:

“the stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system, within a time frame sufficient to allow ecosystems to adapt naturally to climate change, to ensure that food production is not threatened and to enable economic development to proceed in a sustainable manner.”


Climate change per unfccc

Climate Change per UNFCCC

  • 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 period…


Unfccc principles

UNFCCC principles

  • Responsibility to future generations

  • Equity

  • Countries have common but differentiated responsibilities and respective capabilities

  • Parties have a right to develop


Commitments

Commitments

  • to adopt national policies on mitigating climate change.

  • cooperate in technology transfers, help countries (especially poor countries) adapt to climate change.

  • support and enable research, education training and awareness.


Structure1

Structure

  • Conference of the Parties (COP) as the supreme body periodically reviews, establishes needed subsidiary bodies and changes

  • Secretariat, administrative/managerial body

  • Subsidiary Body for Scientific and Technological Advice (SBSTA) & Subsidiary Body for Implementation (SBI)

  • Financial Mechanism - facilitate implementation money (primarily in developing countries). Operation is entrusted to one or more international entities (e.g. World Bank, GEF )


Annex 1 annex 2 countries

Annex 1& Annex 2 countries

Annex 1

Austria, Australia, Belarus, Belgium, Bulgaria, Canada, Croatia, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Latvia, Liechtenstein, Lithuania, Luxembourg, Monaco, Netherlands, New Zealand, Norway, Poland, Portugal, Russian Federation, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey, Ukraine, United Kingdom, United States of America.

Annex 2

Austria, Australia, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Japan, Luxembourg, Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, United Kingdom, United States of America.


Unfccc adaptation

UNFCCC - Adaptation

  • Annex 2 Countries – responsible to fund adaptation.

  • Impacts will happen – those least to blame will be the most impacted


Overview of kyoto

Overview of Kyoto

  • Adopted at COP-3, Kyoto 1997

  • Entered into force in 2005

  • In Pursuit of the main objective of UNFCCC

  • Commits Annex 1 countries to stabilize emissions

  • Commitment Period 2008-2012


Kyoto critique

Kyoto Critique

  • Absence of key emitters

  • Targets too low

  • Forests ignored

  • Weak enforcement

  • In limbo Post-2012 (2015 Paris COP)

  • Adaptation under represented


Important coda on kyoto protocol

Important Coda on Kyoto Protocol

  • Sustained opposition by some companies/countries to Kyoto Protocol

    • ‘Unfair’ (large developing country emitters not included)

    • ‘Bottom line’ is the ONLY metric shareholders care

  • Sustained and ‘dirty’ campaign to discredit climate science by some companies


Implications of climate change for extractive industries

Implications of climate change for extractive industries


Adaptation and mitigation

Adaptation and mitigation

  • Adaptation: adjustment of systems in response to actual or expected climate stimuli or their effects (to reduce harm or exploit benefits)

  • Mitigation: action to reduce the sources or enhance the sinks of greenhouse gases


International council on mining and metals commitment on cc

International Council on Mining and Metals commitment on CC

  • ICMM’s Council of CEOs: All members commit to

    • introduce emissions reduction strategies

    • ensure the efficient use of natural resources

    • support R&D of appropriate low GHG technologies

    • measure and report on progress

  • World Petroleum Council’s commitment to CC?


Climate change policy responses implications for the extractive industry

Energy demand

Transportation

Quality of life

Flooding impacts

Infrastructure

Water availability

Hydropower

Migration

Insurance

Property/life loss

Infrastructure

Coastal protection

Land use change


Climate change policy responses implications for the extractive industry

Impact of policies – mitigation (emission reduction) / adaptation (resiliency building)


What makes extractive industries vulnerable

What makes Extractive Industries vulnerable?

  • Reliance on large fixed assets with long design lifetimes

  • Dependence on long global supply chains(climate-related disruption significantly impact operations in multiple locations)

  • Operations in challenging geographies and climates, including fragile environments with ecosystems highly sensitive to CC

  • Work with local communities highly vulnerable to CC risks (e.g., impacts on health, water availability and agriculture)

  • Heavy reliance on water and energy for processing, both of which can be highly climate sensitive


What makes extractive industries vulnerable1

What makes Extractive Industries vulnerable?

  • Dependent on energy intensity of the industry

  • Emission reduction policy exposure

    • Power generation – renewable or regular grid

  • Carbon pricing – carbon tax or carbon trading

    • Differential risk to competiveness across countries

  • Non-competitiveness (Kyoto heterogeneity)


Climate change policy responses implications for the extractive industry

Potential climate change impacts

on-site

Risks to structural integrity of surface

impoundments and site conditions from

flooding, subsidence, landslide and soil

erosion, as well as thawing permafrost in

some locations.

Risk of health, economic impacts on local

communities and environments.

On-site health and safety risks from

increased risk of floods and wildfire.

Exploration: increased access to new

reserves.

Operations: reduced efficiency, increased

downtime and higher operational costs from higher temperatures, increased intensity of extreme weather events, and reduced water quality and availability, particularly in areas where water resources are already under stress.

Reduced performance or inadequate

capacity for water treatment, water, and

waste impoundments due to changes in

hydrological conditions.

Construction, closure and post-closure:

environmental impact assessment may needto take future climate into account; long-term closure and reclamation plans should reflect the expected climate over the site lifetime.

Operations, closure and post-closure:

increased weathering of potentially

acid-generating rock due to increases in

temperature and precipitation.

ICMM, 2013. Adapting to a changing climate: implications for the mining and metals industry

Source: ICMM 2013


Climate change policy responses implications for the extractive industry

Potential climate change impacts

off-site

Inputs to mining and metals operations

• Water: reduced availability of critical

climate-sensitive inputs such as water and

energy, particularly in water-stressed

regions.

• Energy: lower reliability in generation and transmission of power due to disruption by extreme climatic events, insufficient water for cooling or hydroelectric generation, increased demand during extreme heat events or from higher seasonal temperatures.

• People: absenteeism, illness and reduced labouravailability due to increased risk of heat stress, chronic diseases, health and social impacts from drought and other ecosystem changes.

Supply chains

• Damage to transport infrastructure

(ie road, rail, marine, air) from extreme

events (eg flooding, tropical cyclones,

droughts, landslides) and sea level rise

(eg erosion, inundation).

• Reduced reliability from disruptions or

delays to transport routes (via rail, road,

sea and waterway) from seasonal changes and extreme events.

• Increased risk of damage to stockpiled

ore/metals due to supply chain disruptions.

• Changes in the periods over which remote locations are accessible by land or marine transportation modes.

Markets

• Changes in demand for metals and minerals to meet need for technologies to mitigate or adapt to climate change.

• Opportunities to capitalize on changes, or risks from loss of competitive advantages or the emergence of competitive disadvantages.

Source: ICMM 2013


Your views

Your views

What are some impacts of a changing climate on your operations?

What are some examples of company decisions in response? What are some barriers to action?

What policies would you adopt if put in charge?


Managing climate risks and opportunities

Managing climate risks and opportunities


C oping vulnerability and adaptation

Coping, vulnerability, and adaptation


Adaptation framework processes

Adaptation framework processes

Source: UKCIP, 2003


Many tools to support risk and vulnerability assessments

Many tools to support risk and vulnerability assessments

UNDP Stocktaking of Tools and Guidelines to Mainstream Climate Change Adaptation, 2010


Framework for evaluating climate change risks to the mining and metals sector

Framework for evaluating climate change risks to the mining and metals sector

Source: ICMM, 2013


Climate change policy responses implications for the extractive industry

Climate Risk Management Approach

(months, seasons, decades)

Identify Vulnerabilities and Opportunities in Collaboration with Stakeholders (systemsand sub-systems)

Reduce Uncertainties (learn from the past, monitor the present, access information on the future)

Identify Technologies & Practices that Reduce Vulnerability

(e.g., engineered solutions and revised design specifications)

Identify Decisions and Institutional Arrangements to Reduce Vulnerability, Mitigate Impacts, Transfer Risks

(e.g., impact of targeted regulations, early warning & response systems, climate insurance)


Example of linking climate information with impacts indonesia

Example of linking climate information with impacts: Indonesia

S. Someshwar, Principal Investigator : Various research projects funded by USAID, Government of Netherlands, Columbia University, European Union, Government of Indonesia


Example of linking climate information with impacts indonesia1

Example of linking climate information with impacts: Indonesia

Indonesia: Forecasting peatland fire risk2 months ahead


Key messages1

Key messages

  • Climate is changing

  • Global mitigation policies (nature, commitment, binding…) are in flux

  • The level of impact depends on industry type and policy exposure (Annex 1, post-Kyoto ‘binding’…)

  • Understanding of climate variability & change and of policies is critical for anticipatory planning

  • Do nothing is not a sound business proposition for company sustainability


From vulnerability to resilience sustainability

From ‘vulnerability’ to resilience/sustainability

To jiujitsuvulnerability DISCUSSION

  • Reliance on large fixed assets with long design lifetimes

  • Dependence on long global supply chains(climate-related disruption significantly impact operations in multiple locations)

  • Operations in challenging geographies and climates, including fragile environments with ecosystems highly sensitive to CC

  • Work with local communities highly vulnerable to CC risks (e.g., impacts on health, water availability and agriculture)

  • Heavy reliance on water and energy for processing, both of which can be highly climate sensitive


From vulnerability to resilience sustainability1

From ‘vulnerability’ to resilience/sustainability

To jiujitsuvulnerability DISCUSSION

  • Dependent on energy intensity of the industry

  • Emission reduction policy exposure

    • Power generation – renewable or regular grid

  • Carbon pricing – carbon tax or carbon trading

    • Differential risk to competiveness across countries

  • Non-competitiveness (Kyoto heterogeneity)

  • ……….


Additional material

Additional material


Climate change policy responses implications for the extractive industry

Source: ICMM 2013


Climate change policy responses implications for the extractive industry

Climate variables affecting port assets & functions (1)

Source: McEvoy & Mullett, 2013, Enhancing the resilience of seaports to a changing climate


Climate variables affecting port assets functions 2

Climate variables affecting port assets & functions (2)


Climate change policy responses implications for the extractive industry

Must consider system-wide impacts of climate on…

Source: Freed & Sussman 2008; ICMM 2013


More adaptation framework processes

More adaptation framework processes…


Survey of canadian mining professionals mining companies consulting firms suppliers govt

Survey of Canadian mining professionals(mining companies, consulting firms, suppliers, govt.)

Large majority – climate has large or moderate impact

Slight majority – yes or don’t know if CC impacting

Large majority – bad or very bad for business

Source: ArcticNorth Consulting, 2009


Survey of canadian mining professionals mining companies consulting firms suppliers govt1

Survey of Canadian mining professionals(mining companies, consulting firms, suppliers, govt.)

Majority taking action to manage current CC

Uncertainties and cost are main barriers to action

Slight majority – yes or don’t know if CC WILL impact

Source: ArcticNorth Consulting, 2009


Survey of canadian mining professionals mining companies consulting firms suppliers govt2

Survey of Canadian mining professionals(mining companies, consulting firms, suppliers, govt.)

Large majority – future CC bad or very bad for business

More snow, fires, extremes and changes in seasons

Different projections; same projections as positive

Fewer taking action for future CC

Source: ArcticNorth Consulting, 2009


Survey of canadian mining professionals mining companies consulting firms suppliers govt3

Survey of Canadian mining professionals(mining companies, consulting firms, suppliers, govt.)

Action mostly engineering & admin

Uncertainties and cost remain main barriers to action

Source: ArcticNorth Consulting, 2009


Survey of canadian mining professionals mining companies consulting firms suppliers govt4

Survey of Canadian mining professionals(mining companies, consulting firms, suppliers, govt.)

Aspects of mine operations susceptible to climate change

Source: ArcticNorth Consulting, 2009


Survey of canadian mining professionals mining companies consulting firms suppliers govt5

Survey of Canadian mining professionals(mining companies, consulting firms, suppliers, govt.)

Aspects of mine operations susceptible to climate change

Implications of policies (that are in response to CC) were not considered by the respondants

Source: ArcticNorth Consulting, 2009


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