Energy, Industry, Commerce And Financial Services

Energy

Hydropower generation is the energy source most likely to be affected by climate change. It is sensitive to the amount, timing, and geographical pattern of precipitation, as well as temperature. There is the potential for more intense rainfall events (which would require more conservative water storage strategies to prevent flood damage), greater probability of drought (less hydroelectric production), and less precipitation (less water available during warm months); all of which point to less hydroelectric capacity at current powerhouses.

Reduced flows in rivers and higher temperatures reduce the capabilities of thermal electric generation. Higher temperatures also reduce transmission capabilities. Hydropower generation will be affected by increased run-off (and consequent siltation). Excessive drought will lead to higher evapo-transpiration, which adversely affects water volume, and will thus reduce hydroelectric capacity.

Excessive drought, which is likely to affect forest cover, will also pose problems for fuel wood supply. Oil and gas production, especially in coastal areas, will be negatively affected by increased wind and wave action, heavy precipitation, and shoreline erosion. It will also be affected by the loss of oil and gas extraction infrastructure due to sea-level rise and coastal inundation. Climate change-induced extreme weather events such as windstorms, floods and tornadoes (which can topple transmission towers and hundreds of kilometers of power lines) will exacerbate the rate of failure of transmission systems of electric utilities. The cost implications are prohibitive. Yet demands for both space-cooling and space-heating can only increase, placing further dependence on this already burdened industry.

Industry

Two categories of industries were identified as being vulnerable to climate change: (1) industries with activities that are dependent on climate (construction, transportation operations and infrastructure, energy transportation and transmission, offshore oil and gas production, thermal power generation, industries, such as paper mills, that depend heavily on water, pollution control, coastal-sited industry, and tourism and recreation), and (2) sectors in which economic activity is dependent on climate-sensitive resources (agro-industry, biomass and other renewable energy production).

Industries, generally, may be exposed to direct or indirect impacts of climate change. Such potential impacts of climate change will depend on a number of factors, which include:

1. The geographic location of such industries: Industries located in the coastal zone will suffer the negative impacts of sea-level rise and attendant coastal inundation and flooding. Significant sea-level rise will, for example, virtually eradicate beach-based tourism and recreation industries, as well as disrupt oil and gas exploration and extraction activities in the region. Industries located in the northern dry belt will be exposed to the effects of warmer climate on water supplies that make process cooling and environmental processes more difficult and unduly expensive.

This belt is equally prone to occasional devastating thunderstorms, floods and windstorms that can destroy industrial infrastructure, giving rise to cessation of activities and incurring costs for expensive repairs to damaged facilities.

2. The nature of resource inputs used by the industry: Industries that rely on inputs which are climate-dependent (such as agro resources) become vulnerable when those inputs experience any moderate or severe changes in production due to climate change. Harvest failure, for example, would directly impact the fruit juice manufacturing and food-processing industries.

3. The dynamics of consumer behavior: Consumers respond to changing atmospheric temperatures in the clothing they choose to wear or buy. Industries that produce clothing may have to alter their production profile by producing more or less of warm/cool weather clothing in response to changing demands dictated by either rising or falling temperatures. Similarly, industries may have to design and produce more wind/storm-resistant umbrellas in both the northern and southern ecozones in response to rising incidence of severe windstorms. Other industries affected by climate change will have to adapt or fold up. The telecommunications industry, for example, is affected by heavy storms that fall cables. Sales slump under such circumstances and can seriously affect the industry as a result.

4. Government policies pertaining to climate change: The imposition of carbon taxes, for example, would increase the cost of production inputs.

5. Other industries: such as construction, housing, transportation, energy generation and distribution, are all affected by the incidence of extreme weather and weather-related conditions. All economic activity is affected, as is quality of life and patterns of human settlement. Increased and higher rainfall days will damage roads and increase road maintenance costs. The southeastern ecozone will be the most vulnerable given the sedimentary rock profile of the area, its heavy rains, and its susceptibility to rapid soil wash and erosion. Total vehicular accidents nationwide will also be expected to rise, given a scenario of higher and more intense rainfall rates. At the same time, given a scenario of excessive temperature conditions associated with warmer climate, serious problems would also be experienced with the road infrastructure. Such high temperatures are usually known to soften asphalt roads, explode or buckle concrete roads, warp railroad rails, close airports because of lack of “lift” in extremely hot air conditions, and increase mechanical failures in automobiles and trucks. Adverse weather conditions have equally been known to cause flight delays, flight cancellations, and flight re-routing, with attendant heavy financial losses to the airline industry.