AES
Energy & Climate Change Overview
The scientific and financial evidence, and political consensus for the need to take action against climate change has increased dramatically. Government legislation and regulatory controls are growing, fiscal pressure is rising, the actual greenhouse gas (GHG) emissions are starting to be taxed, and consumers are voting with their wallets. The application of sustainable and efficient technologies is becoming more important in competitive markets, and organizations which take proactive preventative measures are set to gain benefits, both in consumer goodwill and financial returns.
Man-made GHG emissions are the leading cause of climate change. Over the last hundred years or so, the level of GHGs in the natural blanket around our earth has become thicker because more GHG is released into the atmosphere through the burning of fossil fuels by people. This thicker blanket traps more energy causing the Earth’s temperature to rise.
Carbon dioxide (CO2) is the most important of the six GHGs. Carbon and other elements makes up the basis of life on Earth. Forests, soils, oceans and the atmosphere all absorb and release CO2. The problem is that every day people are burning fossil fuels and releasing more GHGs than the natural cycle can handle so we are creating a build-up of CO2 in the atmosphere that absorbs and re-emits infra red radiation contributing to the 'greenhouse' effect which is one of the main causes of climate change.
Over the medium to long term the use of financial instruments to trade and manage GHG emissions will increase and this represents both costs (for the emitters) and benefits (for those that decrease their emissions). Review of the financial risk posed by climate change is gaining recognition in corporate governance proposals, shareholder value and liability insurance reviews. This means corporate analysis of material risk exposure and management and disclosure of GHG emissions is needed.
Changing consumer demands for African products will dictate the need for African business and suppliers to manage GHG emissions. Consumers of African tourism and agricultural products are increasingly aware and concerned about how many long-haul flights they take and how many food miles their food and products are flown. If these consumer markets increasingly make low carbon purchasing choices, African suppliers will need to demonstrate that they are taking action to reduce and manage their GHG emissions
International governments acknowledge that harmful effects of climate change are already evident and include both environmental and financial damage. Climate change may impact the stability of resources for industry, such as water supplies for agricultural communities, sea and weather patterns for coastal tourism economies, and fish stocks for the fishing industry. GHG emissions from fossil fuel combustion have been linked to reductions in plant species and impacting air quality severely affecting human health. Weather storms are expected to increase and the World Health Organization warns of disasters due to malaria, cholera, and other diseases that become prevalent after weather storms.
Analysts predict that Africa will be hard hit by the impacts of climate change. Africa is regarded as vulnerable and will struggle to adapt to climate change and to supply its communities with infrastructure services necessary for socio-economic development. The Intergovernmental Panel on Climate Change report on climate impacts (April 2007) estimates that Africa will experience severe water and food shortages. It estimates agricultural industries could see yields drop by 50% by 2020.
Nick Sterns Review of the economics of climate change (October 2006, commissioned by the UK Government) has gained international recognition and outlined the economic urgency of immediate action needed. The report estimates the cost of dealing with climate change is substantial, but only a fraction of the cost of not dealing with it. Taking bold early steps to curb GHG will be profitable for business, government, consumers and society at large. Business and organisations are increasingly requested to manage their GHG emissions as an integral part of their operations.
