Climate Change & Policy Responses: Implications for the Extractive Industry

1. 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

2. 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

3. 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

4. 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”

5. What affects the climate?

6. Historical global temperature and CO2 levels

8. Climate variability and climate change New record high Regionally -averaged temperature Long term average 1900 2000 2030 Year

9. A changing climate shifts the odds and distribution of climate events Source: IPCC, 2011

10. 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).

11. Status in understanding and predicting climate across timescales: counter-intuitive Understanding “Good” Predictability “Some Info” “Frontier” Timescale Seasonal-Interannual Climate Change Decadal

12. 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

13. 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

14. Socio-economic assumptions for emissions scenarios GTZ Climate Change Information for Effective Adaptation: A Practitioner’s Manual, 2009.

15. 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.

16. 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.

17. Climate Models: Global vs. Regional Source: Hadley Centre (2004) PRECIS Handbook.

19. Climate of selected countries: historical conditions and projections

20. World Bank Climate Change Knowledge Portal

21. World Bank Climate Change Knowledge Portal

22. SW Uruguay: Monthly Means of Precipitation (1915-2008) Pick 15 years randomly

23. 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”)

24. Source: S. Zebiak

25. 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

26. October-December Wetter October-December Drier

27. July-SeptemberDrier January-MarchDrier

28. October-DecemberDrier

29. July-SeptemberWetter October-DecemberWetter

30. October-DecemberWetter

31. 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

32. 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

33. 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

34. World Bank Climate Change Knowledge Portal

35. 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)

36. 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.”

37. 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…

38. UNFCCC principles • Responsibility to future generations • Equity • Countries have common but differentiated responsibilities and respective capabilities • Parties have a right to develop

39. 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.

40. 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 )

41. 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.

42. UNFCCC - Adaptation • Annex 2 Countries – responsible to fund adaptation. • Impacts will happen – those least to blame will be the most impacted

43. 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

44. Kyoto Critique • Absence of key emitters • Targets too low • Forests ignored • Weak enforcement • In limbo Post-2012 (2015 Paris COP) • Adaptation under represented

45. 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

46. Implications of climate change for extractive industries

47. 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

48. 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?