Energy firms see upside to climate change
Analysis: Extreme weather caused a bump in power consumption and potential profits
WASHINGTON — From rising sea levels driving up insurance claims to droughts damaging crop yields, climate change poses an existential threat to virtually every industry on the planet.
But for the energy sector — the industry most responsible for the rising concentration of greenhouse gases in the atmosphere — climate change actually could be a boon for business.
An economist with European oil major BP recently concluded an unexpected jump in global energy demand last year largely was due to a rise in the number of very hot and very cold days in some of the world’s most populated areas, including the United States, driving up consumption of power and heating fuels — and the carbon emissions that most of the world’s governments are racing to reduce
“As they reach for the switch of the heater or air conditioner, energy consumption goes up,” Spencer Dale, group chief economist at BP, said at an event at the Washington think tank Atlantic Council earlier this month. “If
there’s a link between the growing level of carbon in the atmosphere leading to the weather effects we saw last year that will signal the beginning of a more worrying, vicious cycle where increasing levels of carbon lead to more extreme weather patterns, which in turn lead to greater growth in energy and carbon.”
Climate change and the global effort to combat it generally have been perceived as a threat to Texas’s sprawling oil and gas sector and other industries that produce large volumes of carbon dioxide. But BP’s analysis suggests at least in the short term, a warming planet could increase demand for fossil fuels.
Scientists are reluctant to try to explain the causes behind short-term weather patterns. But generally speaking, a warming planet is expected to drive up the number of extremely hot days, said Deke Arndt, chief of the National Oceanic and Atmospheric Administration’s climate monitoring branch.
“Although 2018’s outcomes aren’t confidently attributable to global warming,” he said, “the long-term trend is almost certainly driven by it.”
The phenomenon of climate change driving up energy demand and thus carbon emissions — due to global systems’ current reliance on fossil fuels — is one that has long worried policymakers.
In last year’s National Climate Assessment, government scientists predicted a greater number of hot days would drive up U.S. electricity demand between 2 and 9 percent by 2040.
Add in a growing global population and a rising middle class in hot climates like India and Africa — where air conditioning has long lagged behind the United States — and the International Energy Agency is forecasting global energy demand will grow more than 25 percent by 2040.
“The climate science certainly tells us were going to expect more hot days, more days over 95 degrees with super high dew points to the point people can barely cool themselves off,” said Doug Vine, a senior fellow at the Center for Climate and Energy Solutions. “Energy consumption is expected to grow, and carbon emissions are expected to grow.”
That trendline stands in conflict with the goals laid out in the 2015 Paris agreement on climate change, in which the vast majority of the world’s governments agreed to take steps to reduce carbon emissions to limit warming this century to no more than 2 degrees Celsius.
To do so, the United Nations Intergovernmental Panel on Climate Change says energy systems worldwide need to both become efficient — generating more energy from every ounce of fossil fuels burned — and steadily replace power sources that emit carbon emissions (such as internal combustion engines and coal plants) with those that do not (wind turbines and gas plants that divert carbon dioxide to be stored underground or converted into building materials).
But last year’s uptick in energy demand suggests that no matter how much more efficient energy systems become, any gains could easily be offset by millions more people installing air conditioning in their homes and businesses.
“The only way you win that war is the type of energy that’s used has to be zero carbon,” said Rafe Pomerance, a consultant and chairman of Arctic 21, an activist group. “The question is, ‘Can it go global and fast enough?’”
Carbon emissions from energy grew 2 percent last year, the largest annual increase in seven years, according to BP’s analysis. Whether the world can expect similar increases in years to come — as climate alters the world’s weather patterns — is a question for climate scientists, Dale, the BP economist, said.
John Nielsen-Gammon, a climatologist at Texas A&M University, said last year’s hot weather was likely to become a more consistent feature of life on earth. But he said the unusually cold weather in the United States, China and some other regions of the world last year was less likely to repeat itself as the planet steadily warms in the decades ahead.
“There would be no disagreement the weather contributed to an uptick in energy consumption and greenhouse gas emissions last year,” he said. “People tend to generalize and say climate change is increasing extremes of all types but that’s a misconception. It’s increasing some extremes, like heat waves, but decreasing others, like extreme cold. And some we don’t have a clue on, like tornadoes.”