Our climate is changing, globally and locally. Not only are those changes accelerating and becoming more pronounced, but the changing climate is also driving greater variability in our weather. These changes and their importance are, for many, only a philosophical concern; yet the impacts are anything but.
Climate change has, for some time, been considered a long-term challenge, and one to be dealt with in the future; however, the accelerating rate of change, and the long service life of the infrastructure we build, means that we must act now to avoid the worst impacts of a changing climate.
Considering climate change through a risk lens allows today’s conversation to be less philosophical and more tangible. The challenge is no longer someone else’s, but ours; the solutions less abstract and more pragmatic. But what is climate risk?
Climate risk comes in two main forms: physical climate risk – the risk posed by the physical changes to our environment; and what is often called transition risk - the risk that comes from changes in regulations and policy, market conditions, technology, as well as risk to an organization’s reputation. However, as with all times of change, come opportunity; such as an opportunity to respond effectively to our changing climate and provide greater client value, utilize new technologies, or even find markets.
Enough greenhouse gases have been emitted since the industrial revolution to “lock in” climate change for centuries to come, ensuring the physical risks of our changing climate will persist; and as we adjust to our changing climate, the risks, and opportunities, that come from the transition to a decarbonized future will not abate. What will be different is the balance of physical and transition risk.
The “do nothing” scenario for our future climate would see global average surface temperatures rise by, on average, approximately 5 degrees Celcius, and in Canada significantly more; the very worst physical impacts of climate change become manifest.
To keep average surface temperature increases to below 2 degrees Celcius (the generally accepted limit to avoid the worst impacts of climate change), will necessitate huge disruptions to our energy and land-use systems. If we do nothing to abate greenhouse gas emissions, we must primarily manage physical risk, while if we are to effectively reduce emissions, we must better manage transition risk.
So which scenario should we plan for?
There are so many factors affecting which scenario will come to pass that we cannot plan for just one. As we head into a future of radical uncertainty, where the past is no longer a good predictor of the future, we must look to techniques that allow is to manage and appreciate that uncertainty without expecting to resolve it.
Scenario planning is a decision-support approach that allows us to imagine and plan for different futures, and recognize that each represents its own unique combination of risks and opportunity.
Associated’s Climate Services group led by Jeremy Fyke and Malcolm Shield can help you understand climate risk – both physical and transitional – and how it may impact your projects. We offer advice on how scenario planning can manage uncertainty.
About the author
Malcolm Shield, Ph.D., PMP, GHG-IQ, P.Eng., specializes in energy planning, emissions management, and development of energy and emissions strategies. He has extensive experience working with interdisciplinary teams to consider technological, financial, and regulatory solutions for decarbonization. Malcolm worked with C40, a network of the world’s largest cities, providing leadership, facilitation, and technical advice to develop tailored climate action plans.