Survey looks at European power sector challenges
DNV release says political failure to support the sector is a weakness
A new survey from Norwegian risk firm DNV reveals how the European power sector is responding to the demands of climate change.
Obviously, the global climate change will also have a major impact on the future business environment. 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 is today releasing the results of its study of the European power sector’s future risks, which had a special focus on climate change.
“We wanted to explore how the European power sector views the new challenges and opportunities arising from climate change. 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,” says Elisabeth Tørstad, Director for Cleaner Energy at DNV.
The key findings
The survey has particularly focused on the approach taken to climate change risk management and best practices, in addition to assessing the perceived operational risk exposure in own operations in Europe and developing markets, both today and five years into the future.
The findings in each focus area vary in several ways, but the main conclusions are as follows:
* 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 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.
* The reputational risk from being seen as a contributor to climate change stands out as another main risk contributor.
Ms Tørstad experienced a strong interest among the participating companies in addressing and discussing the business implications of climate change. The qualitative and explorative nature of the survey methodology opened up for further and deeper discussions, and some of the respondents’ feedback was:
“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”.
“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”.
“I’m very thankful for the support provided by the sustainability managers of the 13 leading European power companies that agreed to be interviewed. The geographical spread of the survey participants within Europe, as well as variations in the operators’ energy portfolios, added further value and relevance to the survey’s overall findings,” she emphasizes.
“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. This is one the reasons for our upcoming parallel survey of the US power sector,” she adds.