Interactive Climate Map from Google Shows Future Impact of Climate Change

Using Google Earth, the UK Foreign Office (FCO) and the Department of Energy and Climate Change (DECC) have released an interactive climate map that provides insight on the impact of climate change around the world.

The Google Earth map shows how the world would be affected by a global average temperature increase of 4C. It illustrates rising water levels and reduced crop yields in different parts of the world if temperatures are not curbed by cutting greenhouse gases.

The map service is directed at a global audience; it details the work of the scientists working in countries across Asia, Latin America and Africa. It uses Met Office data, and will also feature Foreign Office’s own work on the economics of climate change that it has been doing with the likes of the Asian Development Bank. The map is interactive, allowing you to roam the planet and explore projected impact and view video providing climate scientists and researchers discussing impact details.

Articles detailing the project can be found at The Telegraph and the Financial TImes.  The online map is available here. If you don’t have Google Earth installed, you can download a copy here.
Climate Change Impact

Creating Leaders Great at Performing in Uncertainty without a Clue as to Why

There is an interesting phenomena going on in some of the major business schools in Europe. In some – you are not allowed to mention environmental factors as a major catalyst for new business models/thinking. It is “understood” that as a lecturer, you inspire the students with fresh thinking but only so far. Go further, and people just roll their eyes and pigeon-hole you as a treehugger.

Here are three quotes from top business leaders:

“The era of ‘abundance’ is over. The future will see our natural resources, from oil to food, having some level of restriction placed on them.”Andy Bond, CEO, Asda (May 2009)

“We must rapidly wean ourselves off our dependence on coal and fossil fuels.” – Richard Branson, announcing investment of all profits from Virgin transport business, estimated at $3 billion over 10 years, to be invested in fighting global warming. (21 September 2006)

“Sustainability is here to stay or we may not be.”Niall Fitzgerald, UK CEO, Unilever

Now, none of these guys are particularly treehuggy. And most MBAs would give their eyeteeth to fill the shoes of these guys – and yet – in many MBA programs – coverage of sustainability issues is absent, apologetic, sidelined, or sketchy.

Let’s stop tiptoeing around the obvious. Business leaders can handle the truth. Though there is uncertainty on what the impact will be, climate change is a global issue that will impact business. Period.

In 2008 the US Director of National Intelligence (DNI) presented to Congress the DNI report National Intelligence Assessment on the National Security Implications of Global Climate Change to 2030. Here are a few excerpts:

“The United States depends on a smooth-functioning international system ensuring the flow of trade and market access to critical raw materials such as oil and gas, and security for its allies and partners. Climate change and climate change policies could affect all of these—domestic stability in a number of key states, the opening of new sea lanes and access to raw materials, and the global economy more broadly—with significant geopolitical consequences.”

“In addition, anticipated impacts to the Homeland—including possible increases in the severity of storms in the Gulf, increased demand for energy resources, disruptions in US and Arctic infrastructure, and increases in immigration from resource-scarce regions of the world—are expected to be costly. Government, business, and public efforts to develop mitigation and adaptation strategies to deal with climate change — from policies to reduce greenhouse gasses to plans to reduce exposure to climate change or capitalize on potential impacts—may affect US national security interests even more than the physical impacts of climate change itself.”

“Climate change is a threat multiplier in 
the world’s most unstable regions.”

“From a national security perspective, climate change has the potential to affect lives (for example, through food and water shortages, increased health problems including the spread of disease, and increased potential for conflict), property (for example through ground subsidence, flooding, coastal erosion, and extreme weather events), and other security interests.”

These leaders are talking about fundamental shifts in ‘givens’ that require action, a joined up way of behaving, new ways of thinking, and new approaches. And our top business schools should be on the leading edge.

I first got interested in business schools ignoring the big elephant in the classroom two years ago when I was delivering a course on dominant business metaphors and implementing change. I wanted to say one line – one sentence inviting students to ponder how the nature of sustainability planning would be different if organisations, in addition to approaching business as a ‘competitive sport’, also approached it as a living organism. The professor who brought me in said ‘no’ – that the MBAs would feel they were being hijacked away from the course they had paid for. There was a specific elective for sustainability – and outside of that – best not to mention those issues.

Over the past few months, I’ve been speaking with several top MBA programs in Europe. Each is saying that leaders need, more than at any other time in history, to be able to lead in the presence of ambiguity, and to be able to perform collaboratively with high levels of uncertainty. Applied Improvisation skills are rather good for that, which is why I’m there in the first place.

What I find interesting in talking with these top MBA programs is that many are not contextualising the WHY of this new emphasis. Not addressing why managers/leaders would need to be so good at ambiguity.

“Growth for the sake of growth is the ideology of the cancer cell.” – Edward Abbey

I sat up when I saw this quote. It was refreshing to see in a lecture to potential MBAs at a leading business school in the Netherlands a few weeks ago. During my time at the school, two of the guest lecturers talked about sustainability – kind of…

The first lecturer used the Abbey quote (Abbey is a renown outspoken sustainability activist) and talked about the need to create ‘sustainable businesses’ quickly dismissed the notion of ‘sustainable’ as being linked to any ‘environmental’ issues… – it was about a business which can keep going, despite ‘adversity’. Given what scientists are saying about increasing disruptions over climate change, peak oil, peak minerals, peak water, how could adversity due to these factors not be mentioned?

The other lecturer had just hosted a biomimicry event two weeks before and deeply cared about the environment and sustainability. He works with top leaders in the best companies around the world on developing leadership skills. In his session, he talked about the profound need for leaders to be comfortable leading in the presence of ambiguity, but didn’t say why. In the break he confided that there are some groups with which you cannot talk about the environment directly. He had been gently testing the water with that day’s group and found he could mention it a bit…but only a bit. Several people were there for the express purpose of earning more money with an emphasis on value extraction, not particularly wealth creation/exchange.

Contextualising is a vital part of learning. The military does this routinely in their simulations – creating real world scenarios in the classroom. If we are facing a series of challenges (climate change, scarcity of water, oil, minerals, etc.) we must mention that as part of what leaders will face.

One initiative that gives me hope is the UN Principles for Responsible Management Education (PRME) initiative. The head of a leading MBA program in the UK turned me on to it. Finally – a global effort is being made to transform business schools and the Assocation of MBAs is part of it. In theory – that should mean that the taboo-ness of sustainability issues being explicitly mentioned, or mentioned only in specific electives – disappears.

As I continue to work with MBA programs, I will keep you posted on what I see going forward in this arena. And if you know of any best practice in this area – please post it here. Let me know!

“Unless we change direction, we are likely to end up where we are going.” – Chinese proverb

© July 2010 by Belina Raffy

Sustainable Energy Security: Strategic Risks and Opportunities for Business

Lloyds of London, the insurance market, and Chatham House have published a white paper on Sustainable Energy Security that details the risks and opportunities for business.

Lloyd’s CEO, Dr. Richard Ward, doesn’t mince words in his foreword to the white paper:

This report, jointly produced by Lloyd’s 360 Risk Insight programme and Chatham House, should cause all risk managers to pause. What it outlines, in stark detail, is that we have entered a period of deep uncertainty in how we will source energy for power, heat and mobility, and how much we will have to pay for it.

Is this any different from the normal volatility of the oil or gas markets? Yes, it is. Today, a number of pressures are combining: constraints on ‘easy to access’ oil; the environmental and political urgency of reducing carbon dioxide emissions; and a sharp rise in energy demand from the Asian economies, particularly China.

All of this means that the current generation of business leaders – and their successors – are going to have to find a new energy paradigm. Expect dramatic changes:

  • Prices are likely to rise, with some commentators suggesting oil may reach $200 a barrel.
  • Regulations on carbon emissions will intensify.
  • Reputations will be won or lost as the public demands that businesses reduce their environmental footprint.

The growing demand for energy will require an estimated $26 trillion in investment by 2030. Energy companies will face hard choices in deciding how to deploy these funds in an uncertain market with mixed policy messages. The recent Deepwater oil spill shows all too clearly the hazards of moving into ever more unpredictable terrain to extract energy resources. And the rapid deployment of cleaner energy technologies will radically alter the risk landscape. At this precise point in time we are in a period akin to a phony war. We keep hearing of difficulties to come, but with oil, gas and coal still broadly accessible – and largely capable of being distributed where they are needed – the bad times have not yet hit. The primary purpose of this report is to remind the reader that all businesses, not just the energy sector, need to consider how they, their suppliers and their customers will be affected by energy supplies which are less reliable and more expensive.

The failure of the Copenhagen Summit has not helped to instil a sense of urgency and it has hampered the ability of businesses – particularly those in the energy sector – to plan ahead and to make critical new investments in energy infrastructure. I call on governments to identify a clear path towards sustainable energy which businesses can follow.

Independently of what happens in UN negotiating rooms, businesses can take action. We can plan our energy needs, we can make every effort to reduce consumption, and we can aim for a mix of different energy sources. The transformation of the energy environment from carbon to clean energy sources creates an extraordinary risk management challenge for businesses. Traditional models that focus on annual profits and, at best, medium term strategies may struggle. Parts of this report talk about what might happen in 2030 or even 2050 and I make no apology for this. Energy security requires a long term view and it is the companies who grasp this who will trade on into the second half of this century.

Executive Summary

  • Businesses which prepare for and take advantage of the new energy reality will prosper – failure to do so could be catastrophic.
  • Market dynamics and environmental factors mean business can no longer rely on low cost traditional energy sources.
  • China and growing Asian economies will play an increasingly important role in global energy security
  • We are heading towards a global oil supply crunch and price spike.
  • Energy infrastructure will become increasingly vulnerable as a result of climate change and operations in harsher environments.
  • Lack of global regulation on climate change is creating an environment of uncertainty for business, which is damaging investment plans.
  • To manage increasing energy costs and carbon exposure businesses must reduce fossil fuel consumption.
  • Business must address energy-related risks to supply chains and the increasing vulnerability of ‘just-in-time’ models.
  • Investment in renewable energy and ‘intelligent’ infrastructure is booming. This revolution presents huge opportunities for new business partnerships.

A change in the energy market balance between East and West

Advanced economies remain the biggest consumers of primary energy per person but by 2008 non-OECD countries led by China and India had outstripped them in terms of the share of world demand. This shift began in the 1990s, partly because manufacturing shifted eastwards. Meanwhile, lower population growth, de- industrialisation, greater efficiency, higher fuel prices and a concern for the environment are lowering demand for oil-based fuels and coal in the OECD.

These consumption trajectories mean there is likely to be a tipping point in 2015 when countries in Asia-Pacific need more imported oil in total than the Middle East (including Sudan) can export.

Middle East oil surplus vs Asia-Pacific deficit
Middle East oil surplus vs Asia-Pacific deficit (Source: John Mitchell, Chatham House 2010)

The white paper goes on to detail market forces, energy trends, risk and opportunity.  This is recommended reading for business and government leaders and risk managers.

The Slow Search for Solutions: Lessons from Historical Energy Transitions by Sector and Service

The Basque Centre for Climate Change (BC3) has released a new research report that examines past energy transitions by sector and service to identify features that may be useful for anticipating future transitions. The United Kingdom was the first to make the transition from traditional energy sources to fossil fuel.  The UK experience may help us understand how to transition to a low carbon economy.

Each country will have transition patterns driven by natural resources – coal, oil, wind, tidal, geothermal, etc.  The chart below shows the energy transitions for the UK from 1500 to 2000. Note the early use of wind.  Since the data only goes through 2000, UK’s significant recent investment in wind initiatives is not reflected.

Share of Primary Energy Consumption in the United Kingdom (1500-2000)
Share of Primary Energy Consumption in the United Kingdom (1500-2000)

Highlights of the BC3 Report

  • The main drivers for the energy transitions were the opportunity to produce cheaper or better energy services.
  • In a majority of cases, the successful new energy source or technology provided the same service (i.e. heating, power, transport or light) with superior or additional characteristics (e.g. easier, cleaner or more flexible to use).
  • The existence of a niche market willing to pay more for these characteristics enabled the new energy source and technology to be refined gradually until they could compete with the incumbent energy source.
  • Nevertheless, this implied that, on average, the whole innovation chain took more than one hundred years and the diffusion phase nearly fifty years.
  • In the same way, since low-carbon energy sources and technologies are valued for their low climate impact, they will be able to develop gradually until they can compete with fossil fuels.
  • However, for a transition to take place, low carbon energy sources and technologies will have to provide cheaper energy services – possibly helped by carbon taxes or tradable permit approaches.
  • Based on past experiences, a complete transition to a low carbon economy is likely to be very slow.

How fast will our transition to renewables be?  Can business and government get behind a clear statement of the problem and develop a cogent unified transition plan?  Will the transition be proactive or reactive?

The Real Population Problem

Google Trends tells me that starting in 2008 the monthly number of news stories on population doubled. Most of the stories like to talk about how global population will expand by 30%, peaking at about 9.1 billion people by around 2050.  Though 2050 is a nice round number, and a convenient mid-century marker, one can be lulled in to feeling like it’s a problem that is 40 years off. Not so. The population problem is here and now. And it’s not just about the number of people on the planet, but how those people consume resources.  Let’s take a look at the pertinent trends.

Energy and Population

The rate of population growth has a strong correlation with the effectiveness of the dominant fuel source at any given point in history.  As the chart below shows, wood was the dominant fuel until coal came on the scene in the 1600s. The population growth rate increased modestly with the proliferation of coal.  But the real exponential growth began with the discovery and exploitation of crude oil.  Crude oil production is peaking and the world is in the early stages of a transition from fossil fuels to renewable sources of energy.

Fueling Population Growth

 

 

China, Brazil and India – Chasing the American Dream

As the population has grown, per capita income and consumption have grown. The most dramatic growth has been in the developing countries of China, Brazil and India. Let’s take a look at the trends in energy use and per capita income relative to some of the leading developed nations. Using GapMinder’s Trendalyzer with energy consumption data from BP’s Statistical Review of World Energy 2010 and income data from the IMF, we can see some powerful trends unfolding (N.B. data presented for 1965 through 2008, 1 year steps, circle area proportional to population size, energy use in tonnes of oil equivalent):

  • China, Brazil, and India all show steadily increasing per capita income, with China having the biggest change – outperforming India and Brazil more than 2 to 1.
  • Though US per capita energy consumption is substantially larger than China, Brazil or India, growth has been flat. This comes from conservation initiatives (efficient lighting, insulation, etc.). We must do better.
  • China, Brazil, and India’s energy consumption is growing quickly as they move toward American patterns of consumption. The trend is strong and steady, with no signs of slowing.
Regional Energy Consumption and Income Trends
(click for larger image)

 

Less Is The New More

Though Americans represent only 5% of the world’s population, we are consuming about 24% of worlds energy. We are similarly voracious consumers of water, food, land, etc. Citizens in developing nations aspire to live the American lifestyle. Fareed Zakaria refers to this as the “rise of the rest” in his book A Post American World. But the world has only so much to give. Much of what we consume is not renewable. We are bumping up against the limits of earth’s ability to provide for us. As the population expands, for developing nations, their historically meager slice of the pie will expand. For developed nations, their slice of the pie must contract.

 

Our Ecological Footprint

Using ecological footprint data from Global Footprint Network we can see the current state of consumption for North America and the rest of the world (N.B. width of bar proportional to population in associated region).

Global Ecological Footprint

N.B. Ecological Footprint accounts estimate how many Earths were needed to meet the resource requirements of humanity for each year since 1961, when complete UN statistics became available. Resource demand (Ecological Footprint) for the world as a whole is the product of population times per capita consumption, and reflects both the level of consumption and the efficiency with which resources are turned into consumption products. Resource supply (biocapacity) varies each year with ecosystem management, agricultural practices (such as fertilizer use and irrigation), ecosystem degradation, and weather.
 
This global assessment shows how the size of the human enterprise compared to the biosphere, and to what extent humanity is in ecological overshoot. Overshoot is possible in the short-term because humanity can liquidate its ecological capital rather than living off annual yields.

Carrying Capacity

The last sentence of the note above is important. The developed nations are already consuming beyond the earths capacity to provide. Carrying Capacity has been exceeded and as it is exceeded, Carrying Capacity declines. While developed nations are making headway improving conservation, there has been little reduction of consumption – we have simply slowed the rate of per capita consumption. Meanwhile developing nations are moving up the consumption curve, aiming for an American-class lifestyle. Depletion of earth’s precious resources accelerates – oil, potable water, wild fish, species, clean air, etc. are all in decline. Earth’s Carrying Capacity is thought to be somewhere between 1 and 3 billion people. We have been operating the planet well beyond that for almost 50 years now.

Earth's Carrying Capacity

Even if the population stopped growing today, we are consuming beyond the earth’s capacity to provide. With 6.8 billion people already on the planet, the growth of consumption is the population problem, right now.

Zacharia suggests “As each country rises up, they become more self confident and nationalistic, and less inclined to cooperate in global unity toward a common goal of tackling the pressing problems of this century.”

And quoting Hamlet: “There’s the rub.”

  • Population has grown beyond the Carrying Capacity of the earth.
  • Increasing demand for critical resources (energy, water, food, land, …) reduces Carrying Capacity further, and accelerates decline exponentially.
  • Climate is changing, pollution growing, species extinction accelerating.
  • And our ability to work cooperatively to meet these challenges is failing.

This is not sustainable.

How do we break the vicious spiral? How can our global economy – grown soft and pudgy during the 20th century’s age of abundance – adapt and function in the lean and mean dog days of the 21st century?